David Miliband: The hon. Gentleman has made an important point. I am sure that he will have seen, as I did, at least a report of the interview that President Medvedev did for the BBC on Sunday, when he stated unequivocally that Russia does not want see the development of an Iranian nuclear weapons capacity. That is why Russia has supported successive UN Security Council resolutions to that end.
	The hon. Gentleman is also right that it is important to recognise the urgency of the matter and the need to make it clear to the Iranians that the American offer currently being developed and made represents the best chance that Iran will ever have of normalising its relations with the rest of the world, and above all with the US. The whole world can play a role in supporting American outreach in that regard. It is not only for Europeans but for Russians and Chinese as well to make it clear that this is the best chance that Iran will ever have to regularise its relationships with the rest of the region and the rest of the world, but that cannot be done while there is so much concern about its nuclear weapons intentions.

David Miliband: The multilateral basis of engagement with the Iranians is first of all in respect of its NPT obligations. That is why this is an IAEA process, as well as a UN process. The sort of confidence and stability that I know that my hon. Friend wants to see in the middle east can be achieved only if nations abjure the sort of rejectionist rhetoric that has emerged from Tehran, which produces the sort of fears that can lead to a nuclear arms race.
	The other thing to say is that it is not only Israel that is worried about an Iranian nuclear weapons programme. If one talks to people from any Arab or Gulf state, one sees that there is a very high degree of concern among them for obvious reasons, given the tinderbox that is always the middle east. The last thing that it needs is a nuclear weapons arms race. In that context, we have a real opportunity, and responsibility, to bring old foes over the Israel-Palestine issue together on the Iranian issue. We believe that it is essential to move forward on the middle east peace process, but we must also recognise that there are also new coalitions to be built on the Iranian nuclear issue.

David Miliband: No, not least because on the Friday before last, the United Kingdom was successful in ensuring that a significant tranche of the £5 billion stimulus package agreed by the EU should be dedicated to countries that want to take on carbon capture and storage, and €180 million is coming to the UK precisely for that purpose.

Gregory Campbell: On human trafficking, will the Minister assure the House that targets are in place to ensure a significant reduction, particularly in the numbers of women coming either from or via Ukraine into the UK to work in the manner outlined?

Michael Fabricant: The Minister has rightly identified the problem in northern Sri Lanka with the Tamils, but is he aware that in parallel with all that is the persecution—I think that is the right word to use—of journalists in the Sri Lanka Broadcasting Corporation and in national newspapers in Colombo What steps can the Government take to try and protect journalists and ensure that journalists can speak out and speak the truth?

David Heathcoat-Amory: Would the right hon. Lady agree that spending yet more taxpayers' money in this way is unlikely to do anything good for consumers, as it all has to be paid for? Will she instead look at the continuing blizzard of high-cost, job-destroying regulations that are pouring out of Brussels? The European Scrutiny Committee has to look at more than 1,000 such regulations a year. Will she ask for at least a moratorium on such regulation, at least for the duration of the recession, in the interests of employment and consumers alike?

Gillian Merron: May I first wish the hon. Gentleman a very happy birthday? [Hon. Members: "Hear, hear!"] That clearly commands support in all parts of the House.
	This is not about imposing models of democracy, but assisting with the development of good governance. I share the hon. Gentleman's view that good governance in Africa needs stability, growth and development. That is the purpose of the work that we do in the Foreign and Commonwealth Office and in DFID. I can assure him that we will work closely not only with Governments but with non-governmental organisations, civil society and the media to give them a voice in ensuring that their countries can be stable, absent from the bloodshed that he mentions, and can move forward.

David Miliband: I visited Basra and Baghdad at the end of last month on 26 and 27 February. Today in Basra there is a ceremony marking the handover of coalition divisional command. Multinational division south-east, led by British troops, has done so much to stabilise southern Iraq, and the handover signals the merger of MND south-east with MND centre to form a new MND south command for all nine provinces of southern Iraq. Over the next few months, the final draw-down of British forces will take place while civilian engagement from the UK rises. As the first majority Shi'a democracy in the Arab world, Iraq's future success matters to the whole region, and we will be working with the Iraqi Government and people for that success.

David Miliband: We have always taken the view that elections need to be credible. Not only presidential, but parliamentary elections are due next year—the latter are rarely discussed. Sustainable security improvements are vital for presidential and parliamentary elections. It is dangerous to profess confidence, but I am confident that a significant number of measures, including deploying extra troops from the US and the Afghan national army, are designed to ensure security for people seeking to exercise their democratic right on 20 August.

Council Tax Rebate

Joan Ryan: I beg to move,
	That leave be given to bring in a Bill to rename council tax benefit council tax rebate; and for connected purposes.
	This Government have a proud record in reducing poverty among pensioners. Since 1997, a raft of measures, including the largest ever increase in the basic state pension, has helped to lift 2 million pensioners out of poverty and means that pensioners are, for the first time in our history, less likely to live in poverty than the working population. Too many of our pensioners, however, including our veterans who have served this country with courage and distinction, still live in poverty, so this is no time to rest on our laurels.
	The House will be aware of the valiant campaign led by the Royal British Legion to increase levels of council tax benefit take-up. It has rightly highlighted that for many pensioners, council tax represents a significant outlay—in some cases, it is their largest single expenditure. I am sure that Members of all parties will recognise council tax as one of the most frequently raised issues on the doorstep, particularly among pensioners.
	Council tax benefit was introduced to address precisely this issue: to help the most vulnerable members of our society with their council tax bills. But as it stands, as many as 2.2 million eligible pensioners do not claim council tax benefit, even though they are entitled to it. In fact, the level of take-up of council tax benefit has actually fallen by 10 per cent. over the past seven years for which data are available. This means that council tax benefit, which has the highest number of potential claimants, has the lowest take-up level of any state benefit. Nearly half of all pensioners who qualify for council tax benefit do not make a claim, and almost £1.5 billion of council tax benefit—money that has been set aside by the Government to help people pay their council tax bills—goes unclaimed each and every year.
	The sum of £1.5 billion may sound like an abstract figure, but in real terms it would mean an additional £598 per year per eligible pensioner to help cover the costs of council tax. As 41 per cent. of pensioners living below the poverty line are entitled to council tax benefit but do not claim it, £598 is a very significant amount. Indeed, in many cases it would be sufficient to lift pensioners out of poverty altogether. A higher take-up rate of a council tax benefit could, therefore, bring about dramatic reductions in the level of pensioner poverty. Just a 10 per cent. increase in take-up would lift 47,000 pensioners out of poverty, and the Royal British Legion believes that as many as 20,000 veterans would be better off if they claimed council tax benefit. That is why the Royal British Legion was able to attract 25,000 signatures to the petition it presented to No. 10 Downing street at the end of February. The Government accept that current levels of council tax benefit take-up are not good enough, and I welcome the fact that they have made it clear that pensioners are their priority group for increasing take-up. I believe that rebranding council tax benefit as "council tax rebate" would increase take-up, especially among pensioners, and this is what my Bill seeks to achieve.
	For accuracy alone, there is a strong argument that council tax benefit ought to be rebranded as a rebate. Effectively, council tax benefit assesses an individual's liability to pay tax and as such is misnamed at the moment. Using the term "rebate" rather than "benefit" would reflect more accurately council tax benefit's true nature as a reduction in tax liability, rather than a state benefit. There is also evidence to suggest that this simple renaming could encourage higher levels of take-up. Indeed, when my hon. Friend the Member for Oldham, East and Saddleworth (Mr. Woolas) appeared before the Communities and Local Government Committee in June 2007 as a local government Minister, the first suggestion he provided for ways to improve council tax benefit take-up was, without being prompted,
	"To change the name to something that is not benefit".
	In its final report, the Select Committee went on to endorse that sentiment, as its predecessor Committee did in 2004, and as have the Audit Commission and the Lyons inquiry into local government.
	In his report, Sir Michael Lyons highlighted that when the old domestic rates regime was in place, the term "rebate" was used instead of the term "benefit". Take-up rates stood at 75 per cent. overall and were around 90 per cent. for older people then, which is substantially higher than the current estimated take-up rate of between 55 and 61 per cent. This discrepancy may, at least in part, be explained with reference to the stigma associated with claiming what are perceived to be benefits, which may deter some eligible pensioners from submitting a claim.
	Many older people I meet in Enfield are proud of their independence and do not like asking for help, not least our veterans who fought for the freedoms that we all enjoy. Indeed, a survey conducted by Help the Aged suggested that as many as one in seven pensioners would not undergo means-testing, even if that meant foregoing benefits to which they knew they would be entitled. This is certainly the opinion of the Enfield Borough Over 50s Forum, which, I am pleased to say, supports my Bill. Its chairman, Mr. Monty Meth, told me that the forum—and with more than 3,000 members, it is one of the largest in the country—had
	"first hand experience of people refusing to apply for reduced council tax because of the stigma attached to the idea that they are applying for benefits or for charity, when in fact they are claiming a rebate that is rightfully theirs".
	Renaming council tax as a rebate would address the stigma associated with the term "claiming benefit" and remove this barrier to take-up. In my experience, older people have far less aversion to claiming back tax than to claiming benefits. The use of the word "rebate" would, therefore, provide pensioners with a greater sense of legitimate entitlement to the relief and, moreover, would be consistent with the "second adult rebate", which is already administered by councils and provides a reduction in the council tax bill for some people.
	In principle, the Government accept the case for this change. My Bill does not seek to change the rules that govern who is entitled to council tax benefit or to alter the amount of assistance people receive; it is simply about helping to implement a policy that the Government have already introduced. They accept that the take-up level of council tax benefit is too low, that a priority must be increasing the level among pensioners, including among our veterans, and that changing the name of council tax benefit, particularly by removing the word "benefit", would encourage a higher level of take-up, particularly among pensioners.
	I do not think that any of the supporters of this Bill, who come from all parts of the House, think that a name change is some sort of panacea, but that is no excuse for inaction. There is no master plan, no one-size-fits-all strategy and no single solution to improving the level of council tax benefit take-up, and if Ministers are waiting for one, I fear that they will be disappointed and, more importantly, thousands of poor pensioners will go without the help to which they are entitled.
	Increasing the level of council tax benefit take-up and reducing pensioner poverty, including among veterans, will require a variety of different strategies tied to local needs. That will involve central Government working in partnership with local authorities and using the creativity of voluntary organisations. Given that so many could benefit so much from such a small and straightforward change, I hope that Ministers will listen to the thousands of pensioners, including the 25,000 veterans who added their name to the Royal British Legion's petition, and agree that the case for renaming council tax benefit "council tax rebate" is compelling.
	 Question put and agreed to.
	 Ordered,
	That Joan Ryan, Siobhain McDonagh, David Cairns, Jim Dobbin, Bob Russell, Dan Rogerson, and Mr. Nigel Evans present the Bill.
	Joan Ryan accordingly presented the Bill.
	 Bill read the First time; to be read a Second time on Friday 26 June and to be printed (Bill 82).

Andrew Tyrie: Lord Myners has asserted that the RBS board exercised discretion to enhance Sir Fred's pension. Sir Tom McKillop flatly contradicts that, and he is supported by the minutes. In his letter, he says:
	"There was no question of any discretion being exercised in relation to Fred's pension and no discretion was exercised in that regard by any other RBS director."
	Does not the Chancellor now think that Lord Myners' position is unsustainable?

Alistair Darling: I will in a moment.
	That is important, because it is vital that we help businesses. For example, 100,000 businesses have already benefited from the extra time we have given them to pay taxes. We have also helped small companies by postponing the increase in corporation tax.
	It is very important that we do help businesses and I want to set out a little more of what we propose, but, before I do so, I give way to my hon. Friend the Member for South Thanet (Dr. Ladyman).

George Osborne: If we had a true account of British Government debt that included the PFI and Network Rail liabilities, British debt would be significantly higher. Secondly, British debt is now rising at a faster rate than anyone else's because our budget deficit is higher than anyone else's. Surely the hon. Gentleman cannot be happy with the fact that this Government are running the highest budget deficit that Britain has known in peacetime—higher than when Denis Healey went to the IMF. Surely he cannot be happy with that.
	As I was saying, European Governments are now lining up in agreement that there should not be a second fiscal stimulus, which completely shoots away the ground on which the Prime Minister thought that he would stand at the G20. Faced with that icy response, he went on that rather bizarre trip to south America last week. Even his most loyal henchmen would struggle to call that trip a success. First he went to a half-empty European Parliament and found that the response to his speech by a Conservative MEP got 1.6 million hits on the internet and no one noticed a word that the Prime Minister said. Then he crossed the Atlantic to continue his campaign for more spending, only to find that while he was away the Governor of the Bank of England had said that the country could not afford more fiscal stimulus, and in effect had cut up his credit card.
	Finally, the Prime Minister made it to south America, where not only was he ticked off by the President of Brazil and stood up by Pelé, but the President of Chile gave him a lecture on sound public finances. Instead of addressing the G20 agenda, the Prime Minister was reduced to saying that he would reform the monarchy and that we would keep the Falkland Islands. That is how the chairman of the G20 used the week before the meeting to prepare for that summit. Where is the sense of priority in this Government?
	What is left of the main economic argument that the Government have deployed against us since the autumn—that Britain needs to spend and borrow its way out of recession? It was striking at Treasury questions last week that, when pressed twice, the Chancellor could not bring himself to agree with the Governor of the Bank of England on fiscal stimulus. He was challenged twice to agree with the statement that the
	"fiscal position in the UK is not one that would say, 'Well, why don't we just engage in another significant round of fiscal expansion?'".—[ Official Report, 26 March 2009; Vol. 490, c. 443-44.]
	That is the argument that we have been making, and the Chancellor did not take the opportunity that he was given to agree with it. Indeed, when my hon. Friend the Member for West Chelmsford (Mr. Burns) asked the Chancellor to express confidence in the Governor of the Bank of England, he ducked that question too.
	I would have thought that the Chancellor of the Exchequer should see the Governor of the Bank of England as a key ally. For weeks, presumably with the Chancellor's knowledge, the Treasury has been briefing everyone that actually he agrees with the Governor, the CBI and all the other organisations that are lining up to say that this country cannot afford a second fiscal stimulus. The Chancellor's disagreement is not with the Governor, but with a Prime Minister who thinks that we can borrow our way out of debt.
	Even if the right hon. Gentleman makes it to the next election and, by some remote possibility, his party wins that election, he knows that he will not be reappointed as Chancellor. Everyone knows who the Prime Minister's top choice as Chancellor is—the Secretary of State for Children, Schools and Families. This is the Chancellor's moment in that great office of state. Does he want to go down as the Chancellor who stood by and let his Prime Minister lead the country down the road to fiscal insanity, or as the one who did something to stop that Prime Minister? That is the choice that he has to confront in the next three weeks—does he do the right thing and face down his neighbour, in which case he will earn the gratitude of the country, or does he cave in?  [Interruption.] The hon. Member for Stockport (Ann Coffey) wants to talk about the measures that the Government are taking. Let me take one example, the working capital scheme.
	For five months, since November, we have been calling for a national loan guarantee scheme to support businesses that need credit. In early January, the Government finally conceded that we had a point and promised a guarantee scheme of their own. It was called the working capital scheme and was supposed to start on 1 March. It did not, and businesses desperate for help were left out in the cold again. Then the Business Secretary reassured them and said, "Don't worry, the scheme will be operational in March as originally announced." It is now the last day of March, so where is the working capital scheme that was promised for 1 March and then promised to be delivered by the end of March? Companies are going bust and thousands of people are losing their jobs because businesses cannot get credit, and the scheme announced by the Government in January and promised for March has still not been delivered. That is a scandal.
	Of course, that is the truth of so many Government schemes. The home owners mortgage support scheme, announced in December—not a single home owner has been helped. The automotive assistance programme was announced two months ago—still not a single loan has been made to car firms. The national internship scheme—it was never heard of again. The Government's slogan of "real help now" is a cruel joke to businesses and people losing their jobs up and down the country.

George Osborne: Why will not he intervene?

John Baron: Does my hon. Friend also accept that, although the Government may scoff at individual examples that Members present to the House, surveys throughout the country, especially from the Federation of Small Businesses and local chambers of commerce, show time and again that the majority of local businesses do not believe that any Government schemes will improve lending or terms? That is third-party confirmation that the Government schemes are not working.

Richard Burden: When the hon. Gentleman answers my question, perhaps he could start by also answering the question that my hon. Friend the Member for Chorley (Mr. Hoyle) asked about whether the hon. Gentleman supports a short-time subsidy, which I did not hear an answer to. How would the hon. Gentleman's loan guarantee scheme work? Does he insist that a national loan guarantee scheme would work if it had no money behind it, or does he say that it would have indeed money behind it? In which case, does he agree with the shadow Business Secretary, his right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), who says that if such a scheme was introduced, the taxpayer would take some kind of hit?

John Reid: We are facing problems the likes of which none of us here has ever seen during our time in the House. The shadow Chancellor referred to the legacy of the Blair Government. I share responsibility for that and I share pride in it. When I consider the 700,000 people who are not on NHS waiting lists now or the people who are not losing their sight waiting for a cataract operation or dying because they need heart surgery because we have reduced the maximum time between the doctor's surgery and the operating theatre from some three years to 18 weeks and the average time to eight weeks, I think that, far from being useless expenditure, that is money well spent.
	Let me also tell the hon. Member for Tatton (Mr. Osborne) that as we spend that money during the good times, so we aim to protect people during the difficult times. Although today the shadow Chancellor made a few telling points against the Government, who must share some responsibility, as everyone else does—indeed, as his party leader has said, the Conservatives share some—nevertheless, to take the position that during such a recession we will do nothing and ought to do nothing to protect ordinary people is not sustainable. I genuinely believe that the hon. Gentleman has not risen to the occasion that the opportunity gave him. When he said that he will be in his position as shadow Chancellor right up to the election, perhaps his ambition is too modest. I fear that he may well be in his position as shadow Chancellor well beyond the next election.
	Let me turn to the great challenges that face us, and they are indeed great. We are dealing simultaneously with a fairly typical recession and, on the other hand, a very far from typical financial crisis. The first of these requires a huge stimulation of demand and the second—the financial crisis—requires intervention to ensure solvency, liquidity, oversight, regulation and transparency in the financial sector. That statement is agreed by just about everyone in the world so far as I can see—except for Conservative Members. Both those elements require the widest and most measured range of co-ordinated international action.
	For most of the world, this is not actually a debate about whether we should borrow or not, or about whether we should have stimulus or not; rather, it is a debate and discussion about the extent, the quantity and the measure of that stimulus and of that borrowing. This debate is taking place with every Head of State who is arriving here and with every Prime Minister, too. The only people sitting outside the framework of that discussion are, unfortunately, Members of the Conservative party—with the exception of the shadow shadow Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke).
	It is always easy to criticise the Prime Minister, as the shadow Chancellor did today. I think, however, that that is grossly unfair.  The Independent on Sunday said that, and I agree; indeed, it not only unfair, but untrue. If the Prime Minister set his sights high and if the plans he pursued were of a magnitude unprecedented in the experience of most Members here, that is only because the challenges that we face are unprecedented. If the Prime Minister—it is the Prime Minister who is leading—fails to achieve everything he set out to achieve, or if he achieves only half of it, it will still be a light year away from what would have been achieved by a policy of doing nothing. The nation ought to be grateful for that.
	So I believe we should avoid undue pessimism this week, as we tried to avoid the over-hyped press expectations last week. Let us remember three or four aspects of this whole debate. First, we have a range of weapons in our armoury, so the debate is not just about an additional stimulus. As I understand it, the Conservative party did not agree with the Governor of the Bank of England, because it objected not only to the next potential stimulus but to everything that has been done up to now, which is clearly different from the Governor of the Bank of England. We have automatic stabilisers, discretionary stimuli and quantitative easing, so we should not get particularly hung up on one specific example.
	Secondly, let us remember that national predilections and preconceptions are not just irrational or political or ideological stances; they are shaped by the history of each of our countries. I do not blame a country like Germany, with its sensitivity and great concern about the effects of hyperinflation in the light of what happened in the 1930s, for being rather cautious when it comes to the question of stimuli.
	Thirdly, the point I made is absolutely correct. Even with that caution, Germany's stimulus has been 1 per cent. above what has been done in this country up to now. In the UK, our stimulus has already been significant; although a discretionary stimulus amounts to only about 0.5 per cent., the automatic stabilisers brought in about 2.5 per cent. of gross domestic product of further stimulus. It is significant by international standards.

Vincent Cable: I welcome the debate. I know that the Chancellor has to leave for another meeting, but his participation was welcome. I specifically welcome the one proposal he made, which was in relation to business rates and the smoothing out of the increase. It has been called for by the Federation of Small Businesses and the CBI and it is absolutely right. I hope he will follow it up with the suggestion made by my hon. Friend the Member for Somerton and Frome (Mr. Heath). We know from surveys that half of all small businesses are not even aware that they are entitled to business relief; it is very much dependent on the activism of local councils to bring it to their attention. If this could be done automatically, it would save a great deal of grief among small companies.
	Listening to the contributions that we have heard from both sides, one gets the impression that the dominant issue in economic management is the size of the fiscal stimulus, which is a very odd perspective, regardless of whether one is in favour of it or against it. The International Monetary Fund has just published a very interesting analysis of what is happening in the British economy and where the stimulus is coming from, and it puts things into an interesting perspective. The IMF calculates that the value of the Government's fiscal stimulus over a three-year period is about £20 billion and contrasts that with some £90 billion of stimulus that is coming from interest rate cuts and monetary easing and with the stimulus that dare not speak its name—devaluation—which is providing an extra £40 billion. Although the Government do not acknowledge it, and neither do the Conservatives, for their own reasons, what is actually happening is that the Government are very carefully following the doctrines of Milton Friedman and we have, in essence, a monetary response to the crisis, which is absolutely right, provided it is effective and gets money into the economy. The argument about the fiscal stimulus, although it may be amusing and politically interesting, is fundamentally a sideshow.
	While we are discussing the sideshow, I just wish to reiterate the view that Liberal Democrats have been expressing, which has been reinforced by experience and by the conviction of a growing number of Labour Members. It is that although the VAT cut may have seemed a bright idea, as the Government needed to do something in a hurry, it was not the best way of using £12 billion of taxpayers' money. There is a strong argument for simply stopping it and using the money instead for a much more carefully targeted programme of public investment aimed at social housing, insulating people's homes, and public transport, so that at the end of it there will be assets, many of which will produce an income, which will directly stimulate employment and also do something for the environment.
	An interesting survey has just been produced by HSBC on the environmental impact of the Government's fiscal stimulus, small though it was. It estimates that about 70 per cent. of that package contributed to environmental improvement, as opposed to figures of 15 per cent. internationally and 80 per cent. in countries such as South Korea. The Government have covered themselves in this mantle of the green new deal, but their policies are nothing of the kind and are completely bereft of any environmental value.
	Before I leave the fiscal stimulus, I should note that it was interesting that the Chancellor threw out a challenge to the Conservatives when he said that they were proposing to have a cut—a negative fiscal stimulus—of about £5 billion. That is probably correct, but what he did not mention was that the Government, according to their own figures, are proposing a negative fiscal stimulus in the next financial year, because, of course, public investment has been brought forward and will be cancelled next year. If unemployment is astronomically high next March, as many of us expect it to be—it could be 3.5 million or 3 million; it will certainly be very high—and we are still in a recession, this Government, who seem to attach so much importance to fiscal stimulus, will be proposing that we have a negative one. I do not know whether that was intended or whether it was just the way the arithmetic came out, but the Government will have to solve this problem of how to sustain their commitment to the economy should this recession continue and not be a temporary blip, as they initially thought it would be.
	I turn now to the quantitatively much bigger issue of the banking system. The following question was asked by Members from several parties yesterday: how much are we now exposed to the banks as a result of the various takeovers and the commitments that have been made? The total balance sheet of the British banks is about £8 trillion—about five times Britain's gross domestic product—and we are now liable for most of it. A lot of that is the gross value of derivatives and if we take them out, the figure becomes quite a bit less; but none the less we are talking about commitments that are several times bigger than the British economy.
	The IMF has, again, produced some helpful estimates, although they are very speculative. It estimates that when this banking crisis has finally resolved itself, total losses of about £200 billion will have to be absorbed by the British economy and, in effect, by the British taxpayer. Now, it is not quite as bad as that, because—as the hon. Member for South Thanet (Dr. Ladyman) intervened to point out—there may be a gain from selling the banks, if they are run properly. That might happen in 10 years' time, so the net cost may be a good deal less, but the taxpayer's commitment is substantial, even if it is phased over some years.
	The question that the Liberal Democrats would ask is whether we are getting value for our money. We profoundly disagree with the way the Government are pursuing their involvement in the banking system, because we have the worst of all possible worlds, with large-scale public investment in the equity of the banks, but without effective public control and without the banks being run in the national interest. I thought that it was pathetic when the Chancellor waved a bit of paper and said that he had an agreement of some sort from RBS and Lloyds bank to lend a bit more money. Well, he told us that in October. We have no idea what the banks are doing, and whether they are lending more or less. What we do know is that the banks are doing what they think they have to do, which is to be obsessed with their tier 1 capital.
	Nobody on the board of the banks, in UKFI or in the Treasury is asking how we can maximise taxpayer value. That is the question that should be asked, and it is not being asked because the Government are desperately trying to maintain an arm's length relationship with the banks. As a result, there is no pressure on the banks to ensure that they lend to solvent British companies with a liquidity problem. We know that there are many of those because the companies in our constituencies all tell us the same story—whenever they try to raise money, even if they have a good business or a full order book, they cannot get money from the banks; or if they do, it is on punitive terms with large arrangement fees and demands for massive amounts of security. The Government should intervene to stop that.
	I am told that in France the Chancellor's opposite number, Christine Lagarde, has a daily conference call with the chief executives of every leading bank and insurance company in France to ensure that taxpayer value is aggressively pursued, with the Government working actively with the banks. People may not like the French model, and in normal times I do not think that we would advocate such a dirigiste approach to the banking system. However, the idea that the Government have to grasp the nettle and treat the state-supported banks as nationalised industries is shared across the political spectrum. Those who have advocated that approach include John McCain, the defeated Republican candidate for the US presidency, and Alan Greenspan, so this is not an ideological point. It is a recognition of the reality that if vast amounts of taxpayers' money go into the banking system, it should be run in the national interest.

Vincent Cable: There would be that danger, and that would obviously be a problem for the UK, because we have several global banks here. But RBS, which is a global bank, is not being rescued by the globe. It is being rescued by British taxpayers, and it is not unreasonable in the circumstances for it to make it a priority to lend to solvent British companies. The Government have to pursue that in the interests of the people whom we represent. I am not a nationalist, but that is the reality of the world that we now live in.
	Instead, the Government are pursuing what they call the asset protection scheme, which the Conservatives also support. I argued from the outset, and I probably used strong language at the time, that that is a fraud against the British taxpayer. The leading banks are taking their bad loans to the Treasury—the banks know a lot about those loans and the Treasury does not know as much—paying a fixed fee of insurance and walking away. I have discovered—although I have not yet been able to obtain the documentary evidence of it—that the banks are then promptly closing down the companies that they have insured. That is fraud in a real sense, as well as in a metaphorical sense. That is happening under the noses of the Treasury. There is no reason for that scheme. It does nothing to promote new lending, which is much better done by direction or through credit insurance of the kind that the Conservatives have promoted—both valid approaches to the problem. The scheme is also a massively expensive commitment for the British taxpayer.

Andrew Love: Before the hon. Gentleman moves on from the asset protection scheme, what alternative to it does he believe exists? I understand some of the criticisms that have been made of the scheme, but how else can we deal with the problem of bad assets on banks' books? The public-private scheme that the US Federal Reserve and Treasury Secretary have produced has been roundly condemned, but what alternatives are there?

Vincent Cable: I do not rule out the proposals in Mr. de la Rosière's report, which, as I understand them, involve much closer collaboration between European regulators—he uses the concept of a college of regulators, I believe. Surely all our experience last autumn and the panic induced by the Irish independent policy on bank deposits suggest that European co-operation is needed more than ever. That is not to say that we would support an ending of national regulation—that is the bedrock on which the collaborative structure is based. A combination of the two is needed.

Vincent Cable: The implication of the right hon. Gentleman's argument is that some sort of clearing house is needed internationally to create a market for those products. As I understand it, that has been agreed in principle. There is a particular problem with one type of derivative—credit default swaps—but most of the others, contrary to some pessimistic expectations, have not exploded in the way that was feared. Certainly, in that respect, effective international co-operation is needed.
	In addition to the broader point on regulation, we may draw several conclusions from Lord Turner's work, one of which is that he, like the Prime Minister, bottled out of answering the question whether the banks should be split into their relatively low-risk utility operations and what the Government of the Bank of England calls their casinos. In practice, in a world of rather complicated financial products, that split is technically difficult to achieve, but the principle is right. I am pleased to see that the Opposition parties are of the same mind on that matter, and I think that many Labour Back Benchers take the same view. I am utterly perplexed as to why the Prime Minister, uniquely, seems to be standing in the way of such a reform.

Ruth Kelly: My hon. Friend is right in parts. Of course, the overwhelming problem was deflation, but how the world reacts to deflation decides whether it will manage to come out of it properly. There is always a case, in specific areas, for really well-targeted tariff protection, but overall, the world system has to remain open to growth. We have to accept that 70 per cent. of world trade comes from developing nations. Without that contribution, the whole world's growth would slow down. It was not until the Bretton Woods economic summit in 1945 that the world was able to unite to agree a new international economic and financial architecture that laid the foundations for half a century of peace and prosperity.
	The G20 meeting this week is a huge opportunity for world leaders to agree to: stimulate the world economy as much as is necessary, either this year or next, depending on their specific circumstances; continue to take the measures necessary to restore trust in the banking system to get credit moving again; and design a system to minimise the risk of any repetition in future. It is clear that, to date, Britain has been leading the way on the international stage, arguing for bank recapitalisation, designing an innovative scheme to protect and insure banks against toxic assets, and putting in place a significant monetary and fiscal easing to stimulate the economy and get growth going again—policies that are being replicated, in one form or another, around the world. Indeed, only this morning the OECD said, in an interim report on the world economy that it produced to inform the G20 meetings:
	"While some have dubbed this severe global downturn a 'great recession', it will remain far from turning into a repeat of the 1930s Great Depression, thanks to the quality and intensity of government policies that are currently being undertaken."
	The hon. Member for Tatton (Mr. Osborne) talks about fighting domestic battles on an international stage; I would argue that it is the Conservative party that has been attempting to do that. Unfortunately, the debate at home has constantly been subject to distortion from the Conservative party, so I want to take a moment to explore some of its hypotheses before outlining the measures that I think that we ought to take, as well as some of the most pressing risks to the current approach taken by the Government, particularly for those in the developing world.
	Let me start with the statements of the Leader of the Opposition. I was reading a speech that he made last week, which continued his well-worn theme, attributing the cause of this recession to the weakness of the British economy. He said:
	"Our banking system is not separate from our economy, it is a reflection of it...The unsustainable debts in banks are a reflection of the unsustainable debts in our households, our companies and our government."
	At first sight, that seems a completely unremarkable thing to say, as well as politically expedient. But unfortunately that leads him and his party to formulate completely the wrong policy prescriptions to deal with the current crisis because he continues:
	"So while of course it's true that some of our problems are global...we've got to recognise that the underlying policy failures were national."
	I do not know of any serious economic commentator in the world who says that this synchronised global downturn is due to British national policy mistakes.

Ruth Kelly: I do accept that, but I want to go on to quote the Governor of the Bank of England, whom the right hon. Gentleman is so fond of quoting, who so pithily expressed it by saying that
	"banks are global in life and national in death."
	That is precisely the opposite argument to the one that the Conservative party has been making. In other words, of course, Britain was exposed to the global economic downturn because it had a large financial sector. It had lots of global banks based in London. Those banks were indeed global; they operated across the world. When it came to saving those banks, it was the responsibility of the British Government, as of course it should be. We need only to think of the Icelandic banking crisis, which affected individuals and local authorities across the UK, or the collapse of Lehman Brothers, which reverberated across global boundaries, to realise that that is true.

Peter Lilley: It is always a privilege to follow the right hon. Member for Bolton, West (Ruth Kelly) since she returned to the Back Benches. She has consistently given the House thoughtful and well-informed speeches on economic matters, even though in this case I profoundly disagree with her, on both her analysis and her prescription.
	Unless we establish the cause of the current economic crisis, we will not be able to find a cure or a way of preventing a repetition of the problem. Unfortunately, so far analysis has focused not on establishing the ultimate cause, but largely on allocating blame to greedy bankers, impotent regulators and incompetent Americans.
	Incidentally, following the point that the right hon. Lady made, the Prime Minister cannot say, as he does when he is trying to escape any share of the blame himself, that the problem arose solely in the US, and simultaneously blame the British bankers. Either the problem was caused exclusively in the US, in which case not only is the Prime Minister innocent, but so are the British banks, or the British banks contributed to their own downfall and aggravated our economic problems, in which case not only are they guilty—I believe they do share in the guilt—but given that he was responsible for regulating the banking system over the past 12 years, so was the Prime Minister, the former Chancellor, guilty of his share of aggravating our problems.
	I am sure that all the alleged guilty parties deserve some of the blame, but I will argue that their behaviour was essentially a symptom of a much more fundamental underlying cause of our woes. Take greedy bankers. I am sure that bankers were greedy, but bankers have always been greedy—I cannot remember a time when they were not accused of being so. It is a fundamental axiom of logic that we cannot explain a change by a constant. If bankers have constantly been greedy, why has that only now resulted in this change in our economic fortunes?
	The interesting thing is that, in the past bankers, were accused of being greedy because they would lend only to the rich, who had ample collateral, and to low-risk projects at high interest rates. This time they are accused of greed because they have lent to poor people at low interest rates with inadequate and inflated collateral and a risky repayment profile. Bankers' greed has been a constant feature; it is the form that it has taken that has changed and needs explaining. I shall come in a moment to a more fundamental explanation of that change.
	The second alleged culprits are impotent regulators. The common accusation is that deregulation stripped the regulators of the power that they needed to prevent the excesses of the past decade. In fact, under the regime that the Prime Minister introduced in one of his first acts as Chancellor, the regulators whose duty was to supervise the banking system in the UK had every bit as much power as they had ever had.
	The other day, my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) reminded the House—and, indeed, me—that I was the shadow Chancellor when the Bill that became the Bank of England Act 1998 was introduced. In the debate on that Bill, I warned the House:
	"With the removal of banking control to the Financial Services Authority...it is difficult to see how...the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse."
	I went on to say:
	"The coverage of the FSA will be huge; its objectives will be many, and potentially in conflict with one another. The range of its activities will be so diverse that no one person in it will understand them all"—
	and so it turned out. I added that I feared that
	"the Government may, almost casually, have bitten off more than they can chew. The process of setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day."—[ Official Report, 11 November 1997; Vol. 300, c. 731-32.]
	I could foresee that then, because the problem was not deregulation but the regulatory confusion and proliferation introduced by the former Chancellor. The regulators have never had more power, employed more people or spent a bigger budget than now, but they have failed. The problem with the regulators worldwide was not lack of power, but lack of foresight and insight; until the 11th hour, they were as convinced as the bankers that everything was going swimmingly. In its global financial stability report in April 2006, a year before the crisis erupted, the International Monetary Fund no less, referring to securitisation and other complex derivatives, said:
	"There is growing recognition that the dispersion of credit risk by banks to a broader and more diverse group of investors, rather than warehousing such risk on their balance sheets, has helped make the banking and overall financial system more resilient...The improved resilience may be seen in fewer bank failures and more consistent credit provision. Consequently the commercial banks...may be less vulnerable today to credit or economic shocks."
	That is what the pinnacle of the regulatory system worldwide was saying a year before the crash. The truth is that the behaviour of bankers and regulators was not so much the fundamental cause of the crash as a symptom of a long period of easy money and irrational exuberance fuelled by excessive credit.

Peter Lilley: The right hon. Gentleman puts it extremely eloquently. He demonstrates why he should have been Chancellor during the past few years instead of the person who has occupied that place on the Front Bench—a point on which I am sure that we are similarly agreed.
	The monetary authorities allowed lending and borrowing to outstrip personal incomes. They ignored bubbles in dotcoms and house prices, and promised to limit the downside risk by what became known as the "Greenspan put"—the promise to cut interest rates and pump in money if ever the economy faltered. However, it was not just down to Alan Greenspan in America—the monetary authorities on both sides of the Atlantic pursued almost identical policies. Indeed, it is a bit rich for our Prime Minister to blame the United States and, by implication, Alan Greenspan, when he slavishly copied Greenspan's policies, appointed him as his adviser and awarded him a knighthood for, let it not be forgotten, services to financial stability. Of course, he went on to give knighthoods to most of the bankers he is now vilifying—for services to banking.
	Underlying that "easy money" policy was the willingness of half the world to run savings and balance of payments surpluses, tempting the other half—the Anglo-Saxon and "Club Med" countries—to run deficits fuelled by borrowing. It was lovely while it lasted, but it could not go on for ever. Our banks had to find people to lend their surplus savings to, and as they ran out of rich people with good collateral and low risk of default, they started lending increasingly to poor people with inadequate and inflated collateral and a high risk of default. The ultimate cause of our problems, which we must recognise if we are to come up with the correct solution, is that we took advantage of the cheap savings from the surplus countries until we were so over-borrowed and inflated that the system was ripe for collapse.
	We now face a huge dilemma. The cure for too much borrowing cannot be yet more borrowing—least of all for the UK, which as well as having incurred excessive private debts is running an unprecedented public sector deficit and, unlike the US, does not enjoy what General de Gaulle called the "exorbitant privilege" of having the world's reserve currency. The deficit in this country is expected to exceed the entire defence budget, the entire children, schools and families budget, the yield from doubling corporation tax and the yield that would come from increasing VAT to 25 per cent. If we are contemplating any further discretionary borrowing on top of that, we must be mad, and we would destroy confidence in the markets.

John Maples: Yes, although other things were going on, too. Monetary policy was too loose during that period, and the problems were pretty obvious from monetary statistics, without analysing the banks' balance sheets.
	Adair Turner has basically got his prescription right. I disagree with him about only one thing, which is the Glass-Steagall Act and the splitting of the casino from the utility—of the commercial banks from investment banking. That is worth considering, because the two are much more interrelated than they were, and in investment banking there is a risk of counterparty default. As we saw with Lehman Brothers, if one bank goes down it risks dragging a lot of other securities institutions with it. However, the problem in the current case was irresponsible lending by commercial banks. If we can isolate the deposit-takers and their business from the business that investment banks do with either their own capital or money borrowed on the bond market, we can be much tougher on investment bankers. We can say, "Right, you can write off your equity, and your lenders are not going to get their money back". However, we have a responsibility to protect commercial banks because there is a risk of system failure. I hope that the Government will insist on a tougher look at that.
	We have discussed the remuneration structure, which led to people behaving rationally as individuals but produced a totally irrational outcome—the upside for a banker of taking risks and making money, which was his bonus, vastly outweighed the downside. The worst that could happen to him was not getting a bonus, or perhaps in extremis losing his job. Regulation of that area will have to be considered in future, but there is a danger of over-regulation. The City of London has, on the whole, been doing quite well for Britain and making money for 500 or 600 years. There is a danger that we and the United States will over-regulate our banking systems and lose what is good about financial markets to other places. If we could just stop what is bad that would be fine, but if we risk losing what is good through over-regulation, we will create a new problem. The City is a very important part of the British economy, and hopefully it is not going to go away.
	All recessions are preceded by a monetary boom and lead to irrational lending, high asset prices and consumer price inflation or house price inflation. Recessions have monetary causes and monetary solutions. The Government and the Bank of England have put in place very low interest rates and a bank bail-out that is now worth £500 billion. Such amounts terrify me—a hundred billion here and a hundred billion there, and pretty soon we are talking about real money. A vast percentage of our GDP is at stake and we must keep very tight control over quantitative easing, which is a wonderful euphemism for what we would call printing money if it were being done in Latin America. I am not trying to second-guess the Government on that, but a huge amount of money is being pumped into the system. I hope that when the recovery starts, we will be ready to start getting that money back out again. Otherwise, we will end up with huge consumer price inflation in two, three or four years' time.
	The debate has been about fiscal policy, which I believe is wrong, because the remedies are in monetary policy. We are already running a huge fiscal stimulus, which will be 9 or 10 per cent. of GDP this year and next. The idea that we are somehow not running a fiscal stimulus is completely wrong. As I have said to the Chancellor, we should have been running a surplus in the good years, although there might be room to do a bit more now, as the Germans are finding. However, the United States and Britain are in the almost uniquely weak position of having serious financial and balance of payments deficits. I therefore believe that the US President and the British Prime Minister are wrong about this. They should let the stabilisers work, but we simply cannot afford to spend so much. The Treasury have run out of our, the taxpayers', money. No more of it can be used without seriously endangering the recovery when it comes. If we are saddled with huge quantities of debt that invade the corporate bond market, drive up yields, drive down the currency and leave the taxpayer with interest to pay for years to come, we will endanger the recovery. We have run a fiscal deficit of £200 billion over the past six years, and we look like running another £250 billion over the next two. Frankly, that is enough. We are getting into dangerous territory.
	The recovery will come from the private sector, and I want to make a couple of suggestions about what the Government might do to help that. First, the Government have been regulation junkies—frankly, they have been even worse than we were. A mass of regulation has been introduced and it has cost business a huge amount of money. That is a social luxury, which we can afford in good, but not in bad, times. Five EU directives on employment and four sets of UK regulations are in the pipeline, all of which will impose costs on business and deter job creation. The Government could score a lot of brownie points and do the economy much good through a moratorium on regulation that imposes costs on business or on the Government—regulation imposes costs on the Government, too—until the recession is over. Afterwards, we can debate whether it is a good or bad idea.
	The Government could help the private sector through tax policy. I do not simply mean tax cuts to put money in consumers' pockets. We need to encourage private sector investors to start taking risks again. They are currently risk-averse and are trying to find the safest possible way of conserving their cash. We need to try to alter that equation for them. We could do that if, for example, we provided that any business investment in the next 12 months was free of capital gains tax, or that capital allowances could be enhanced for the purchase of business investments. We could also allow offsets on capital losses made on investments in, for example, the next 12 months, against people's income tax. That would encourage people to invest in business—get investors investing again—by altering the ratio of risk to reward in the tax system. I do not believe it will cost much. Without the investment, there will be no gains on which to pay the tax, but the Government could genuinely help the private sector to contribute to the recovery.
	My final point is that the crisis is of the banking system, not of globalisation or free markets. We must not endanger free markets and free trade, which have given the world the most fantastic growth. They have taken more people in the third world out of poverty than any other system. We must not endanger that when addressing a crisis in the banking system.

Richard Burden: Time is short and I hope that the House will forgive me if I am a little parochial. I want to say a few words about the impact of the economic downturn on my region, the west midlands. The newly formed west midlands regional committee is currently conducting an inquiry on that, and we hope to present a report before long. However, with the Budget approaching and given the severity of the economic downturn in our region, some key issues will not wait, and practical action can and needs to be taken. I want to illustrate that with examples from the region as a whole and, in some cases, my part of Birmingham.
	The West Midlands Regional Observatory noted that the fall in output in the west midlands is worse than the UK average and the worst of any UK region. It has experienced the sharpest job losses of any region in the past quarter and has the second highest unemployment rate of any UK region. The decline has been especially sharp in manufacturing—20 per cent. of manufacturing firms expect to reduce their work force this quarter. That is not to say that the service sector has not also been hit—the equivalent figure is 11 per cent.
	However, manufacturing has long been the bedrock of the west midlands economy and its centre is the automotive industry, with approximately 1,800 companies, 115,000 employees and gross value added of about £5 billion in 2006. Yet the manufacturing redundancy rate stands at 22.8 employees per thousand in the last quarter of last year, and there were more than 5,500 redundancies in the last quarter in 2008 in the automotive industry. In the region, redundancies between November 2008 and January 2009 were up 265 per cent. on the previous year.
	I make those comments not to spread gloom or depression—some parts of the regional economy are holding up well. However, I want to emphasise that the west midlands is not only suffering from a severe economic downturn, but that damage is in danger of being done to the foundations of the regional economy. If we lose those foundations now, we will not be in a position to respond when the upturn comes. We could lose not only strategically significant companies, but the skill base that they maintain, and that will not easily return.
	Action is important to ensure that the west midlands gets a fair deal. I welcome the automotive package that Lord Mandelson announced on 27 January and I am pleased that my hon. Friend the Economic Secretary and Under-Secretary of State for Business, Enterprise and Regulatory Reform is here. He has done some great work in ensuring that applications under the scheme will be processed as quickly as possible. I cannot emphasise enough that we must ensure that help gets to where it is needed quickly.
	We need to move quickly on matters that the Government are considering—I welcome the consideration, but decisions and action are required. We need to introduce a scrappage scheme in the automotive industry. There are different views on that, but the evidence from Germany shows that it has a positive effect on stimulating demand, and I hope that there is good news about that in the Budget.
	I want to take up a point that the hon. Member for Twickenham (Dr. Cable) made and emphasise that a key part of ensuring that firms in the automotive industry and other parts of manufacturing can trade effectively is getting the trade credit insurance industry working again. It is not working, and that does tremendous damage.
	We need to ensure that the strategic firms on which so many other firms depend get loans and loan guarantees quickly, not because they need bail-outs but because they need support to realise their potential. Other local Members of Parliament and I are therefore joining local papers, such as the  Birmingham Mail, the  Birmingham Post, the  Coventry Evening Telegraph and others, to say that we must stand by Jaguar Land Rover.

Richard Burden: I know that the hon. Lady has a great constituency interest in Jaguar Land Rover as a firm that is strategically important throughout the region and beyond. Discussions have been going on for some time between the company and the Government about ensuring that support is there and that the loans from the European Investment Bank come through. It is vital that those discussions are brought to a successful conclusion.
	The hon. Lady mentioned LDV, which I intended to consider next. I often criticise the current administration of Birmingham city council because what it says about itself often exaggerates what it does in practice. However, it was right this weekend to announce waiving business rates for LDV, and it is looking to make orders for that company's products. That was the right decision, and I welcome today's announcement by the Chancellor on doing more about business rates. It is also important that Her Majesty's Revenue and Customs is as flexible as possible in its dealings with LDV. We must all do what we can to ensure that the company gets the support that it needs from the EIB and that other public authorities use their procurement powers to buy the kind of vehicles it produces. In Britain, we have the capacity, skills and technology to produce the low-carbon vehicles of the future, but people and firms must buy them. Public authorities are in a great position to do that. We can also help stimulate investment in the private sector through purchasing those products in the west midlands and elsewhere. Some extension of annual investment allowance would help.
	Let me make two other points. First, my hon. Friend the Member for Chorley (Mr. Hoyle) mentioned training subsidies and subsidies for short-time working. When an economic downturn happens, it is far better to invest to keep people in work and upskill them than to pay for the consequences of their losing their jobs. Contrary to the position in many parts of the country, the west midlands still invests in training. The figures there are still better than in a lot of other places, but we need to do more to help. A temporary wage subsidy for short-time working must be an important part of that. Part of providing the training is that we have to have the facilities to train people. That is why I want to mention something that straddles both training and construction.
	There are genuine questions about how the Learning and Skills Council's capital programme has got into the position that it is in and about how it has become so over-committed. When investment in infrastructure in the third and fourth quarters of last year was still positive nationally, but dramatically falling in the west midlands, now is not the time to allow vital capital projects to do down, either for training reasons or for the construction industry.
	A central plank of the regeneration of the Longbridge site in my part of Birmingham is the relocation of Bournville college to that site, with a state-of-the-art building whose construction will provide new jobs in the short term and new opportunities for quality skills training for generations coming through. That will be a visible catalyst to enable south-west Birmingham not simply to win through the current economic downturn, but to deal with the continuing effects of the huge blow that local communities suffered in 2005 when MG Rover collapsed. People in and around south-west Birmingham deserve that kind of fair deal. Keeping faith with the Longbridge project, including Bournville college, is part of that.
	My right hon. Friends in the Government face formidable challenges. Their job is made no easier by the sniping from the sidelines by Opposition Members, who complain about the effects of the economic downturn but will not commit the resources that are needed to beat it. Ministers do not have the convenient luxury of opposition, but that does not alter the fact that the west midlands region needs urgent action in the short term if we are to seize the opportunities for the long term. That means urgent action on the automotive industry and doing more on infrastructure, particularly those infrastructure projects that are about building the human capital of the region. Colleges are part of that, including Bournville college.

Michael Fallon: If my hon. Friend will forgive me, I will not give way because of time.
	We have to rebalance our economy. I hope that there might now be support across the House for the view that we cannot build a long-term, sustainable, wealth-creating and reskilling economy on the back of an over-inflated housing market, an over-exuberant financial services sector and a bloated public sector, because over the past 10 years, all three have combined to distort how our economy is growing, frustrate innovation across different sectors and prevent the reallocation of resources in response to the change that we now face. All three of those sectors have also been created and sustained on a mountain of debt—private debt in the housing market, to the extent that British households now have debt equal to 70 per cent. of disposable income; public debt, which I shall come to in a moment and which has sustained the vast expansion of the public sector; and commercial debt, which allowed the expansion of financial services.
	We need to look again at how we treat debt in the commercial sector. I welcome the intriguing and thoughtful proposals made a couple of weeks ago by my hon. Friend the Member for Tatton (Mr. Osborne), the shadow Chancellor, about how we might move from a debt-driven economy to an equity-driven economy that no longer has a tax system that favours debt over equity finance and which moves us forward towards reinforcing our skills base and building a better value-added economy.
	We also have to put our public finances in order. With all the extra taxes from the boom years—the additional stamp duty from the housing market, the income tax from City bonuses and the corporation tax from the financial sector—the Government were able to double public spending from £320 billion when they came in to £623 billion in the current financial year. However, the Government have failed in that period to balance the budget since 2001. That is not a deliberate strategic failure and the failure to control our public finances is not sudden or recent. On the contrary: in the 2003 Budget, it was planned that we would be in surplus by 2006. By 2005, that had slipped to 2008, and by 2007 it had slipped to 2009. By last year's Budget, that target had slipped out to 2010-11 and now it appears to have been postponed sine die—which, for the benefit of the House, means "until a Conservative Government."
	That matters, because in the end, unless we properly control the public finances, we cannot achieve our goals as a country, and we are failing to invest for the long term. It is that systemic failure to get a grip on our public expenditure that explains why no new power stations have been built, thus jeopardising our future energy security; why only half our school leavers achieve good GCSEs, thus risking our future competitiveness; why our welfare rules rose in the good years, well before the recession started; and why our dilapidated infrastructure continues to put us to shame in front of foreign visitors.
	In conclusion, Mr. Deputy Speaker, I think our economy is in very poor shape. I think it is badly positioned for the future. Our financial system has been badly regulated and our overall economy has been lopsided in its growth and dominated by debt on such a scale that it is undermining both our private and public finances. Once again, it will be left to a Conservative Government to clean up the mess.

Anne McGuire: Like my hon. Friend the Member for Birmingham, Northfield (Richard Burden), I want to drill down a wee bit to the impact of the current situation on many small businesses in my constituency, and perhaps replicate the experience of other hon. Members, probably on both sides of the House.
	We need to recognise that while we hold big strategic debates, there are actually real people out there who are deeply concerned about what is happening. When I heard the hon. Member for Tatton (Mr. Osborne) talking about the golden legacy of 1997, I remembered what that "golden legacy" was built on. It was built on the destruction of Ravenscraig and of Hillington and Bathgate in Scotland; it was built on the destruction of a mining industry and the decimation of a shipbuilding industry; and it was built on the fact that one in three of this country's children were living in poverty. We should never forget the practical implications of that so-called golden legacy.
	If there is one thing I hope the people of this country will congratulate my Government on, it is that we were not prepared to walk by on the other side when there were dire straits. Sometimes when I look across to the Opposition Benches, I realise why I was angry in 1997 when I first came to this House. It was because of what I had seen—and some of the very right hon. and hon. Members sitting in their places today were part of the architecture that created the decimation of communities, not just in Scotland but right across the United Kingdom. Frankly, our Government have had to pick up that legacy over the last 12 years.
	Let me return to the local circumstances, as I want to reinforce the House's knowledge that the majority of businesses in this country are from the small and medium-sized enterprise sector; certainly in Scotland, they comprise about 90 per cent. of all businesses, while 93 per cent. of all Scottish firms employ fewer than 10 staff. It is their size, agility and adaptability that make small businesses so ideally placed to react to market conditions.
	Unfortunately, as many of us recognise, size is also a weakness. When it comes to the circumstances we are facing just now, small businesses' room for manoeuvre is a little less flexible than it is for some larger businesses. I think we all recognise that credit provides the oxygen that allows these businesses to survive. As someone once said, small businesses are the sort of economic equivalent of the canary in the mine: they are the first to suffer when credit dries up, and they are a good indicator of whether help is getting through.
	The Federation of Small Businesses in Scotland surveyed its members at the beginning of this year, and found three main reasons why they are suffering. Yes, they have seen a drop in demand; yes, they have also seen an increase in the length of time they have to wait for payment of invoices; and, lastly, they have seen their credit decrease over the last few months. In some cases, credit is almost impossible to come by.
	My contribution to this debate is not based only on surveys—no matter how credible—but on the experiences of businesses in my constituency. One of my constituents has a small export business, employing 30 people, and has had a long-standing and little used credit facility withdrawn by the Royal Bank of Scotland. I am told that the business is not insolvent, but as an export business, it depends from time to time on overdraft facilities, which the bank will simply not renew this year.
	Another of my constituents runs a small commercial property consultancy and has banked with the Bank of Scotland for 24 years. The business turns over a modest profit and, against the trend in the property sector, it is projected to break even this year, yet its overdraft facility has been reduced by 20 per cent. and it has been charged a fee for the privilege.
	Another example is from the tourism industry in my constituency. For those who have never visited Stirling, I suggest they do as it is a massive tourist magnet. Every battle ever fought in Scotland appears to have been fought in my constituency: there are the battles of Bannockburn and Stirling Bridge, and the ghost of William Wallace runs around the area. The tourism industry is thus crucial to the local economy, but the tourism businesses have had their "comfort" facilities withdrawn, making it very difficult for them to meet contingencies during the winter and early spring period when there are so few tourists around to generate income.
	I welcome the Government's clear agenda of getting help out there as soon as possible. As has been said on many occasions on this side of the House, it stands in stark contrast to what the Opposition would have done, as they would have let the recession take its course and done nothing. I also know that my right hon. Friend the Chancellor is committed to continue to take whatever action is necessary to bring Britain through the downturn—hopefully stronger and hopefully soon.
	However, I need to impress on ministerial colleagues the fact that, according to the feedback I am getting from the businesses in my constituency, there appears to be a singular lack of knowledge among the banks of the help that is available. Certainly according to actual stories given to me and anecdotal evidence from the Federation of Small Businesses in Scotland, it appears that high street banks are either not aware of the Government schemes that we have spoken about this afternoon or they do not know how they operate. I understand from reading some of the reports produced after the Treasury Select Committee's tour of SMEs around the country that the same message was given to them. Yes, it is fine for us to have strategic discussions and take strategic decisions here, but we have to recognise that information must get through to the grassroots businesses that are so crucial to the existence of our local communities. I know that there is some evidence that the Royal Bank of Scotland is beginning actively to promote schemes and to offer to work more closely with the business community, which is obviously welcome.
	Let me make this concluding point. There is now a level of expectation of what the banks, particularly those in which the taxpayer has majority control, can and should do—and I think the banks need to be aware of that expectation. That should apply not just to their dealings with small businesses, but to how they conduct their own business. To use one final example from my constituency, I received a communication from a small IT company that had a successful relationship with the Royal Bank of Scotland over some years. According to my constituent, it is now a stated aim of RBS to seek offshore services to replace suppliers such as his company—regardless of the logic and, in some cases, in complete disregard of the business case. He accepts the need to get the best price for the job, but is aggrieved—and, I have to say to my right hon. and hon. Friends, with some justification—that firms such as his are being excluded by a bank that he feels he has a stake in. I hope that Ministers will continue to use the influence we have on banks under our majority control to ensure that we not only exercise that control, but exercise it in the best interests of British business at a time when it is facing major difficulties.
	Finally, let me say that small businesses did not cause the recession, but they will be vital in getting us out of it. I know that my Government will continue to take all necessary action to ensure that small businesses are supported through these difficult times, but let me make one final plea: we can talk all we like about this, but the partners—the banks, the business gateways, the local authorities—must ensure that the information is getting through. Otherwise, if there is a complete disconnect between what we say nationally and what is happening locally, we will undermine the credibility of all of us, and perhaps make this situation last longer than necessary.

Robert Smith: I pay tribute to the right hon. Member for Stirling (Mrs. McGuire) for highlighting the importance of small businesses to the economies of our constituencies, and I echo what she said about their frustration that the banks do not always seem to understand what schemes are in place and how they can be best delivered. There is also the general frustration felt by our constituents when they see the big—global—sums going into the banks and then how little seems to be coming out the other end. The banks must be encouraged to recognise the importance of small businesses to our economy.
	I want to raise a specific constituency issue that is of major importance to the UK economy too: the future of the oil and gas industry, which has been a great success story for the UK economy. The Treasury has a vital role to play, and now, in the run-up to the Budget, the timing could not be better to reinforce to the Treasury how important the industry is to the country. I should declare some of my interests as registered in the Register of Members' Interests. The most relevant of them are shareholdings in Shell, an oil and gas company, and a visit to the Offshore Northern Seas conference and exhibition in Stavanger, funded by oil and gas companies.
	Let me first, however, address some of the general issues that have come up in the debate. I echo the view of my hon. Friend the Member for Twickenham (Dr. Cable) that the economic stimulus of the VAT cut was untargeted. Many Members on both sides of the House have argued that a more targeted approach in other areas of the economy might have led to a more direct benefit. On behalf of another industry in the constituency, the distilling industry, I should add the concern that although the VAT decrease is temporary, the spirits increases will be permanent, and that sends a signal to overseas markets that such discrimination against these products can take place. In the run-up to the Budget, I urge the Government to look again at the approach to alcohol taxes and VAT.
	We as a country should celebrate the oil and gas industry as a major achievement, and welcome its successes. A third of the Government's corporation tax comes from the industry, and there are 500,000 jobs in it. It has also been a major part of providing a secure energy supply to this country, and has helped to contribute to our cut in CO2 emissions through the use of a lot of gas in energy generation in this country. We need to build on that strength. Oil and gas is not a lame-duck industry; it faces major challenges at present, but it has a strong future.
	Oil and gas is one of those industries where, even for those who do not believe that the Government and industry should be too closely involved with each other, it is inevitable that there will be a major involvement, because the oil and gas under our seas belong to the nation, but we do not have the skills and wherewithal to get them out of the ground without using private industry. Therefore, there will inevitably be a strong relationship between Government and industry if we are to achieve the maximum benefit for the UK economy.
	Some of the challenges that the industry is facing are background challenges, of which the Treasury was, I think, beginning to be aware even before the current credit crisis. The maturity of the North sea province is one of the challenges: a lot of the infrastructure is quite old, and the finds are much smaller and therefore more expensive to produce, and they rely on the existing platforms and pipelines still being in place to make it economic to produce them. Therefore, there is an increase in costs in a globally competitive market, and the challenge to take forward investment when faced with much higher input costs.
	Then, of course, the oil price dropped and the credit crisis hit. Some of the big companies—ExxonMobil, Shell, BP—have their own cash flow and are not necessarily directly hit by the credit crisis, but the maturity of the UK market makes the credit crisis more serious, because many of the innovations and new explorations in the North sea are coming from smaller companies that do not have the cash flow to make the investment.
	It is also a matter of great concern that the two major banks that were providing a lot of the liquidity in the North sea were the Royal Bank of Scotland and HBOS. With their tightening up of lending, there is a credit problem, and the drying up of the equity markets also causes a credit problem. In the short term, therefore, the industry faces a challenge. What is needed is not a bail-out, but investment incentives and a better sharing of the risks and rewards between the Government and industry.
	The Budget offers an opportunity to provide that. The Government had already been engaged in considerable dialogue with the industry on tax incentives to invest even before this crisis hit, and they have come up with a proposal for a value allowance to encourage greater investment in new fields—smaller fields and high temperature, high pressure fields, and fields west of Shetland where there is more of a challenge and even greater investment costs. The Government must make sure that when they introduce that allowance in the Budget it is of a serious enough scale actually to encourage new investment.
	The Government also need to extend the scope of what they are doing to existing infrastructure. Without the existing pipelines, processing plants and platforms still being in place, the new fields into which they hope to attract investment will not be economic, so they need to extend the tax encouragement to incremental developments on those existing platforms in order to make those platforms worth keeping in place for longer and keep the infrastructure available for the new investment.
	Another issue the Treasury needs to look at is the cash flow crisis, because it can play a part where the banks are failing. Exploration gets tax relief. For existing players with existing income, that tax relief comes up front, but for new entrants the Government could bring forward the tax relief, pay that up front, and then reclaim it over the life of the field as production comes in. If they can trigger a greater interest west of Shetland, it will be a real morale boost to see a new province opening up with new finds.
	The industry itself has an important role to play, and any Government working with the industry need to emphasise to the industry that it must learn the lessons of previous downturns and keep the skills as far as possible, and not make people redundant. So far, there have been strong signs that it has learned that lesson, but we need to reinforce it. People do not come back to an industry in the upturn if they have been turned away in the downturn. The industry also needs to reinforce its own code of conduct in the supply chain by making sure that those who are cash-rich at present settle their bills quickly, because if the supply chain is not kept operating efficiently and effectively during the downturn, it will not be there again for the upturn.
	The reward for the Government if they get the incentives right and get us through the crisis is more oil and gas coming out of the ground in the future, more income to the Treasury in tax returns, and—this is the great jewel in the crown for the UK economy that has come out of the North sea—the exports, such as the skills we now send around the world and that bring money back into this country, to the benefit of our balance of payments. That is especially the case in sub-sea engineering; a great lead has been shown by British expertise in the North sea, from bases in Aberdeen and the rest of the country, and that is now being applied internationally and globally.
	While manufacturing is being challenged in many parts of the economy, the North sea oil and gas industry is providing major investment in, and stimulus to, manufacturing. Many constituents in the north-east of Scotland still do not realise how substantial a manufacturing base we have on the back of that industry.
	That industry has other contributions to make to the future of UK energy in terms of the low-carbon economy, because the skills learned there can be applied to carbon sequestration, so the Government need to make sure that the incentives for taking forward carbon sequestration are well developed. The expertise learned in the sub-sea engineering sector, which I have mentioned, cuts across into the engineering needed for deep-sea offshore wind developments and for tidal and marine developments for the future.
	This is not a lame-duck industry; it is a major part of the UK economy and it is facing a challenge at the moment. With the right handling by the Treasury and the right announcements in the Budget, that challenge can take us forward to a very exciting future where we can see and get rewards—where both the Government and the industry get more. Any oil and gas left in the ground will pay no tax and provide no jobs, and will not contribute in any way to our security of energy supply, so the real message to the Chancellor is to get it right in the Budget. We are at a crossroads; we have bounced back from previous downturns because there was a less mature province and there were still big finds to tempt people back in, but if we do not handle this downturn right, we will not get the benefit of the recovery because we will not have the infrastructure in place to secure that benefit. I urge the Chancellor to make a dramatic move in the Budget to see us through this crisis to a great future—

Lindsay Hoyle: I totally agree with that, and I shall touch on the point that my hon. Friend makes about Wales.
	Support such as I am outlining would enable employers to avoid immediate redundancies and to retain essential staff and skills, and if it were linked to training in the workplace, it would provide the added benefit that we would be best placed when we come out of the recession—we would not have lost the skills and we would not have missed out on training. This country has to be best placed, because when the dam bursts the opportunity will be there before us and we must ensure that our people are in place. We will not be able to go round the country saying, "Who has got this skill? Who has got that job? Come back to work here." That will not be good enough. We have to support these people now.
	Such support would enable employers to avoid immediate redundancies and the scheme should also be about extra training, because long-term work force investment could be provided in this way. The TUC has estimated that, for a cost of £1.2 billion annually, excluding the training costs, up to 600,000 workers could be protected each year through such a supporting measure. The funding could be drawn from the ending of the VAT reduction, and there would be a considerable sum left over to target elsewhere. As I have said, we could maintain manufacturing, which should the backbone of a successful economy in the future; we should not be reliant on the financial services. We have to get back to where we were and we have to learn from the mistakes that we have seen. The previous Government and this Government have fallen into the trap: they gave up on manufacturing when they should have been supporting it, investing and making sure that we were best placed. Let us not make those mistakes again. It is crucial that we get things right this time for the future of manufacturing.
	Across Europe, Governments have recognised the benefits of such a scheme. We have already seen the support that has been given in, for example, Germany, France, Spain, the Netherlands and Italy. Closer to home, the Welsh Assembly Government introduced a wage subsidy scheme called ProAct at the beginning of the year; a scheme that took only two months to set up has become operational and now benefits many businesses and workers across Wales, and quite right too. If Wales can do it, so can we. Furthermore, the introduction of a short-time wage subsidy is supported by business leaders such as the Federation of Small Business, by major corporate organisations such as Corus and JCB, and by many trade unions; this is supported across industry and across the trade unions. We must make keeping viable businesses open and protecting jobs the priority if we are to come out of this recession in a stronger position. If we fail to do so, there is a danger that we will lose many of the much-needed skills that are vital to ensuring that our economy is the best. I urge the Government to introduce such a scheme without delay.
	The second policy that is urgently needed is a change to the way in which statutory redundancy pay is calculated. I am sure that my right hon. Friend the Financial Secretary is aware of the aims of my Statutory Redundancy Pay (Amendment) Bill. Some 200-plus MPs have signed the early-day motion, and the Bill has had a Second Reading and I hope that it will now go into Committee. It is critical that the Government pick up this issue in the Budget. There is a real belief that it would make a difference, so I hope that the Government will not let the people of this country down. Let us reduce the two-year period to one, and let us be honest and stand by our manifesto pledge.
	I also urge my right hon. Friend to reject the proposal for a minimum payment guarantee, floated by the CBI. There is a real danger that many workers would lose out as it would be lower than the current statutory cap.
	Workers up and down the country are facing the threat of redundancy through no fault of their own. We need to do something to help them. Many hard-working people are looking forward to the Budget. People who have saved money and are dependent on those savings for an income are now being failed. We need a scheme that would provide a guaranteed minimum return for savers, through a national savings scheme. That would guarantee that those pensioners who have looked after their money and saved all their lives would get a return when they need it.
	Such a scheme would bring investment into a bank, and that bank should be run by the Post Office. It could provide a guaranteed return to people who save with it, and it would ensure competition for the major banks. We own a bank—Northern Rock—and we should use that. The Royal Mail does not have a banking licence, so we should use the bank that we already own. We need to ensure that there are banking services in rural and urban areas, and we need a bank that will take on the likes of RBS, challenge them and show them what a bank should be. Our bank should look after businesses, its customers and its investors. Pensioners need to know that their money will be safe and protected. We should have a guaranteed minimum return on savers' money. We could fund that by reversing the VAT cut early. The cut has served its purpose, but it should now be reversed.
	We are the party that should be standing by people. We should stand by businesses. We have lots of good ideas, so let use those ideas. Let us work together to formulate a future for our constituents and businesses. Manufacturing needs our help. Up and down the country people are losing their jobs. Nobody should have to lose their job when we can do something about it. My proposals would be a good way forward and protect manufacturing. Let us drive forward together and bring it on.

Michael Meacher: I accept that quantitative easing has not had a chance to be developed; it was put into operation only a few weeks ago. The Government put £75 billion in and still hold another £75 billion in reserve. We cannot reach a judgment on that. There are very good reasons for thinking that its effect will be rather limited and nothing like enough to restore lending to the levels of one or two years ago. That is the problem.
	Even when the Government hold a majority of the equity, as they do in RBS, they are still allowing bailed-out banks, in effect, to dictate the terms. As part of the bail-out, RBS agreed to increase lending to £25 billion—a mere 3 per cent. of its total lending to non-bank customers. President Obama sacked the chief executive of General Motors as a condition of the company's receiving greater aid, but nothing has been done in this country to remove failed or discredited bank executives.
	While the US Congress capped executive pay and imposed a 90 per cent. tax on bonuses, the Government's latest quango, United Kingdom Financial Investments Ltd, is pussyfooting around the bonus culture and the continuing scandal of the massive use of tax havens by bailed-out banks. There is a great danger that UKFI could be captured by the banks it is supposed to be disciplining.
	The Government have socialised the banks' losses while continuing to privatise their control. That is the essence of the point, and the hon. Member for Twickenham (Dr. Cable) made it. The only way to stop this haemorrhaging of the nation's finances is to take temporary—temporary—control of the banks that either cannot or will not increase lending on anything like the scale required to halt the unfolding collapse of the economy. Toxic assets that are virtually worthless should be sold or written off; they certainly should not be underwritten by colossal amounts of taxpayers' money. Boards of directors guilty of gross mismanagement should be removed, and replaced by new managers with a different system of governance and a different set of goals. The new boards, with the security of the backing of the state behind them, should give absolute priority to restoring, as nearly as possible, the full 2007 level of lending to businesses and home owners.
	I repeat: that is not an ideological stance. Nobody is proposing public ownership for its own sake—I am certainly not!—but this is simply a common-sense, temporary mechanism.

Richard Spring: In his Mansion house speech in June 2007, the Prime Minister actually congratulated the City on its global pre-eminence and looked ahead to furthering the objective of light-touch regulation. Today we can look at the wreckage of the failed tripartite regulatory system, the deterioration of our international competitiveness and a massive increase in the involvement of the state. The pound sterling was then riding high. Today the world has made a judgment on us via the performance of our currency, and it is damning.
	We have a chronic trade imbalance, and a recession that is severe and likely to endure for longer than in any other industrialised country. Of course, to a greater or lesser extent, no country is unaffected by the world downturn. We see in this crisis how globally interdependent we are. There was an unspoken mutual interest in the United States purchasing Chinese goods in exchange for China's accumulation of massive dollar reserves, but clearly that is now ending. It may be that as a result of the G20 meeting, there will be more agreement to share in the monitoring of financial activity internationally, and an enhancement of the funds available to the International Monetary Fund, but the fact that the Chinese floated the notion of a new international currency mechanism, which was not rejected out of hand by the US Treasury Secretary, suggests that the total dominance of the dollar since world war two is destined to end. We may be witnessing, in this credit crisis, the beginning of a hugely significant shift in the world order.
	Whatever the final communiqué of the G20 spells out, it will still leave this country in the midst of a terrible hangover of excessive public and private debt, which will cripple us for years to come. The Prime Minister, then Chancellor of the Exchequer, gave the Bank of England a core remit of keeping inflation low. In 2003, under the guise of trying to achieve pan-European measurement comparability, house prices were excluded from the measurement of inflation. That was a tragic error, because on the back of a substantial rise in money supply, interest rates were kept too low for the credit free-for-all that ensued and the huge resulting increase in private debt. Northern Rock could offer 125 per cent. mortgages.
	With cheap Asian goods flooding the country, inflation, as measured by the Bank of England, looked unrealistically low. That is something that the Governor of the Bank of England now regrets. Given the importance of home ownership in this country, and our traditional investment focus on residential and commercial property, it should now be a matter of the utmost importance that the Bank of England reviews how housing costs can be assessed for inflation target purposes, and that the macro-prudential role of the Bank of England incorporates consideration of asset prices. Never ever again can we suffer a repeat performance of the policy that led to an asset bubble being effectively excluded from interest rate policy.
	The transfer of banking supervision to the Financial Services Authority was quite simply wrong. Individuals of the highest calibre in the Bank of England had monitored banks' activities for generations. Of course, no regulatory system has been or ever will be perfect, but I have often heard how much that accumulated wisdom and experience was valued, giving the Bank of England a credibility in the world that is now much diminished.
	We are entitled to look at how our tripartite system failed us, and so compounded the problems that arose from unfettered credit and asset expansion across the world. That has been well spelled out in the Turner review. We know that officials in the Treasury, the FSA and the Bank of England were aware of growing imbalances, but none took responsive action. There was a clear failure to recognise the extent of the systemic nature of the unfolding failure. The inability to act was a fundamental flaw in the system—a system that was of the Prime Minister's creation. We understand that, incredibly, the three principals hardly ever met formally; that is woefully characteristic. To announce a policy, but to then be incapable of dealing with its implementation, is a hallmark of the functional incompetence of this Government.
	We need carefully to consider how, in future, macro-prudential regulation is to be managed. Looking ahead, I believe that we have to revive the central role of the Bank of England. What the public rightly demand is that this terrible crisis is not repeated and that at the very heart of our regulatory system of financial services is a clear pre-emptive remit. Its ability to assess and dissect the continuing pattern of change which invariably arises in the financial sector, to ensure financial stability and to understand and interpret the market place is for the avoidance of both systemic and excessive individual corporate risk. We need a 21st century version of the Governor's eyebrow—a focus and influence that the FSA will simply never be able to achieve.
	Undoubtedly the individual actions of senior bankers have been frankly disgraceful, whether at Lehman Brothers, Merrill Lynch—I worked at both—or RBS. I think that some clearer sanctions should be in place to deal with such individuals. If somebody is guilty of medical malpractice they are struck off by the BMA; indeed, the same approach applies to other professions. In theory, the FSA has the power to apply financial, civil and criminal sanctions, but I am not convinced that it is the right body to do so.
	There is a danger that in the current atmosphere either a lynch mob mentality descends or ultimately that new and counterproductive regulations seek to satisfy public outrage. To pre-empt those outcomes, I suggest that a new body be created with the express purpose of dealing with such individuals, so that next time some master of the universe decides to agree to market a new product that he cannot understand, he might first pause to consider the consequences.
	We have seen a whole series of bank mergers in this country over the years, hastened by a number of dramatic shotgun weddings of late. Vast banks are difficult to regulate and their importance means that we have seen what is often described as moral hazard, including the nationalisation of risk. Of course we are where we are, and our most important challenge is to re-liquify our banking system and return it to profitability and to the private sector, but if there is one lesson we need to learn about this, it is the need to open up banks to effective competition. If that means breaking up in due course some of these mammoth institutions, so be it. The present structure is both oligopolistic and unhealthy.
	The G20 working group has quite rightly advocated convergence towards a single set of high quality accounting standards. It is truly astonishing that credit agencies have been able to triple A ratings in the most cavalier fashion, perhaps in part due to conflicts of commercial interest, with all the consequences for investors in Icelandic and other banks. Also, if we are going to have more common accounting standards, we are entitled to ask for improved accounting methods among the practitioners, who—to put it mildly—have not challenged some outlandish valuations.
	We have seen an almost neurotic flow of Treasury announcements and misjudgments such as the VAT cut. The decline in our competitiveness has led the people of this country to a view of the future that is not optimistic. For everything that the Prime Minister is doing is about political survival; it is compounding the strength of the recession into which his catastrophic economic mismanagement has led us.
	The G20 will not save this Government and neither will the Budget. Frankly, the only thing that will save this country now is the return of a Conservative Government to do what Conservative Governments have had to do time and time again throughout history—unpick the very shambles they have inherited.

Alan Simpson: I was intrigued by the ideas outlined by the right hon. Member for North-West Hampshire (Sir George Young). We would all do well to think carefully about them. My intention probably differs from his because I have no interest in rescuing the system as is, but his ideas may well be part of the system we have to move towards.
	I would like to use my time to put on the record a number of heresies about the mess we are in. I have no desire to reach for the olive branch held out by the shadow Chancellor on a consensus that can be agreed on in the G20 or in this House. I have no desire whatever to save free trade from protectionism. I have no desire to reform the International Monetary Fund, rather than replace it. I have no desire for an agreement that would rescue regulators by giving them some sort of global therapy network where they could cry on each other's shoulders.
	The current crisis is an ideological one; it is a crisis of globalisation, and we should acknowledge that, rather than pretend it is somehow accidental. As soon the deregulating bandwagon got running and production started to chase the lowest labour costs and the least environmental obligations, we were always going to face a looming crisis. Beginning in the 1970s, this was a crisis of overproduction.
	The crisis took us into other contradictions. Those who were producing on the back of cheap labour still wanted markets to sell in. Within the industrial world, the problem was that this put a squeeze on median wages, and the sections of consumer society to which corporations wanted to sell their products were workers who no longer had the wages to buy goods that they used to produce themselves.
	To get out of that mess—square the circle—the answer was burgeoning credit. Unfortunately, that was sold to us as a solution that would deliver everlasting growth. Public debt was changed into private debt—it went off balance sheet. Somehow we allowed ourselves to be mesmerised and think that this would give the world a way out of the mess we were creating. Had we not done that, we would have faced deflationary problems. As it is, we now face a global recession that runs the risk of becoming a global depression.
	This was always inevitable, and we need to acknowledge the collusion between successive Governments in the past 20 years. Many of us on the Labour Benches argued that new Labour's economic and political error was to sign up to an agenda scripted by the old Conservatives, but that, too, is part of history.
	We have to address the fact that in our position, there is probably no choice other than to have an interventionist Government with clear notions of where we want to end up. The question is what sort of interventionism we have and where we intend to redirect the economy.
	In principle I am in favour of bank nationalisation. The Government were right to be willing to step in to guarantee savings. They were probably not right to accept that, as part of the deal foisted upon us by the banking and finance sector, we should somehow have a duty to pay off other people's gambling debts. It is not the duty of the taxpayer to bail out the speculator, but that was the financial absurdity that we allowed ourselves to be bounced into.
	Before the Governor of the Bank of England tut-tuts about a second financial stimulus—targeted at the real economy this time, I hope—I want him to explain to the public and the House how he justifies the £1.5 trillion stimulus that made up the rescue package for the financial services sector that took us into this mess. I find myself in the same position as Joseph Stiglitz, the former World Bank governor, who says that it is not the job of Governments to do anything other than rescue narrow banking, real banking, proper banking or whatever we want to call it. We ought to have the courage to say that we will allow investment banking to collapse.
	This will allow us to get back to a proper framework in which those who run up gambling debts have to take responsibility for them and we do not saddle the taxpayer with them. I suspect that what I am saying is what is said to virtually every Member by people in their constituency. We are challenged by members of the public saying to us, "This is not my crisis, these are not my debts. Why should I accept the liabilities and the mess that have been created for us by gamblers?"
	Had we nationalised the banks and brought them into public ownership as utilities, we would be in a very different position. We could have instructed them to lend into the real economy rather than charge prohibitively to repay the Government or restock their own finances. Part of the problem that firms across the country are facing is in accessing any of the money that has been put into the banking system as notional liquidity.
	The UK has put £285 billion of up-front support into the financial sector, which is 20 per cent. of the UK's GDP and four times the average percentage of the G20 countries that are meeting this week. My argument to the Chancellor is that we have to draw a line and make it quite clear to the financial services sector that we will not take on any more of its bad debts. If that results in collapse, so be it. We should take in fire sale assets and not the debts that we should not carry. However, even if we do that, it will not be enough. I hope that the Chancellor will introduce measures in the Budget that allow us to shift from the old to the new economy.
	Many of those who have the courage to think beyond where we are suggest that, when we come out of the credit crunch, we will find ourselves knee-deep in the climate crunch. The economic issues that define our political agenda and our future will centre on food security, water security and energy security. To those in the energy sector, sustainability will mean a shift to renewable energy sources, not a replication of the polluting energy sources on which we have relied in the past.
	We need a new Bretton Woods, with two distinct features: first, all the aspects that Keynes wanted to include—all the internationally rebalancing mechanisms between rich and poor; and, secondly, the ecologically balancing measures, which were not even considered at that time.
	Like it or not, we live in an era of protectionism. The World Bank recently reported that 17 of the 20 countries that it examined had introduced protectionist measures in the past few months. I hope that our choice will be environmental protectionism rather than the protectionism that has done so much damage in the past. However, we cannot continue to pretend that protectionism is not the realistic scenario that we face. Our history shows that the countries that became the most rich and powerful insisted on the right to protectionist policies to become rich and powerful. In our context now, perhaps we are required to do that to survive.
	In the debates in the G20 this week, I hope that we will have the courage to say that we will not put more money into the banking coffers, but that we will shift the basis on which funding is provided to international institutions through introducing a new global Tobin tax. We need to get corporations to fund a way out of the mess that they created, not citizens and taxpayers.
	Outside the House, on the streets of London and cities throughout the world, protesters demand a different regime from the one we have constructed so far and anything that Parliament has debated. They regard our debates as a feast of fools and, unless we have the courage to go further, they will be proved right.

William Cash: I listened to the debate with great interest, but there have been moments when I felt that we were listening to an economic seminar, some of which gyrated around the learned reports that had been pouring out and the questions with which it is important for those who are super-intelligent in economic matters to grapple.
	I want to deal with several matters that underpin our discussion, and concentrate on what we must do to kick-start our economy and get into a position, against the background of a likely 3 million unemployed next year, where we can ensure that the people who would otherwise be severely disadvantaged are given a genuine opportunity not only to survive but to prosper.
	I should like to get one thing off my chest—it will not surprise anybody. Many of the problems we are experiencing in the current economic crisis are partly attributable to the failures of the European Union.  [Laughter.] I said that would not surprise anybody. In the fiscal policy debate on 7 October, I pointed out that it was a question not only of banks, but of countries. I considered the stability and growth pact and the deficits under the Maastricht criteria and the convergence criteria. I said that I thought that some countries would go under. I leave it to others to judge whether I was right, but the bottom line is that the absurd stability and growth pact means, as I said in an article written as many as five years ago, no stability, no growth and no pact. The idea that somehow one can fine countries that get themselves out of kilter with their deficits is absurd when one considers the size of the deficits, as I said on 7 October. I mentioned the latest figures from the Office for National Statistics to the Chancellor this afternoon.
	The ONS's current estimate of our public sector deficit is £2.2 trillion, which not only is triple what the Government set out in the pre-Budget report only three months ago, but excludes major financial obligations, such as public pensions, which amount to £1 trillion, and PFI schemes, which amount to about £70 billion. Including those obligations takes the total to £3 trillion—I challenge any Member on the Government Benches to say, "Oh, we're not going to pay the public sector pensions." Those sums may not be in the ONS statistics, but they are certainly financial obligations. If we add them in, we arrive at a figure of £3 trillion, which I am informed is 200 per cent. of GDP. France, Spain, Greece and Ireland have all broken the pact's rules with their rising budget deficits. Therefore, the whole thing is complete nonsense.
	In addition, there are riots going on. I know that Ukraine is not part of the European Union, but there are huge riots going on in Latvia, Greece, Spain and Italy. They are grass-roots reactions. No wonder the far right is going up. That is where the problem lies. With hon. Members representing Stoke-on-Trent in the Chamber this evening, I should say that we are deeply concerned about the growth of the British National party in our area. In Stoke-on-Trent there are as many as 12 or 13 BNP councillors, and that is likely to grow as unemployment increases.
	In the few minutes that are left, I want to deal with the absurdity of the direction of the response by the G20 and the Government, which is towards more Europeanisation. There have been letters in the papers today from Roland Rudd, Lord Brittan of Spennithorne and a variety of other euro-fanatics, who are asking for more Europe and not less. The fact is that Europe is a practical failure and people need to wake up to that. I am not against co-operation or trade, but I am very much against European government and a failing system.

William Cash: That kind of language is extremely dangerous. I have even received BNP literature in Pimlico in the past couple of days, which really is extraordinary, and now there is Sevenoaks. Situations are developing all over the country that are of grave concern, but which, at the same time, are a reflection of the economic crisis that we are in and which we must do something about.
	That brings me to the more positive side of the equation. There is European government and over-regulation, but I want the introduction of the supremacy of Parliament amendment, which I have proposed on many occasions. We could thereby override legislation and return to what the leader of the Conservative party said in November 2005 about his imperative policy being to repatriate labour and social legislation, by using our powers in this House and ensuring that we govern on behalf of the people of this country, in accordance with the votes that are expressed in the ballot box, not according to majority votes or the rules of the European Court of Justice.
	While we are on the subject of financial regulation, I simply make the point, which I have made many times, including to the Prime Minister last week, that there are a lot of weasel words coming from the Government. I challenge the Financial Secretary to the Treasury to tell me this evening whether we will indeed repudiate the idea of the Europe-wide supervision of banks and financial services. I have read the 85 pages of the de Larosière report and the European Commission's response. I have also read the Turner report and the explanatory memorandum to the European Scrutiny Committee, by the man whom I have described as the hapless Lord Myners, whom we are summoning to the Committee to explain the explanatory memorandum. There is absolutely no doubt whatever that, despite the Government's attempts to say there will be national supervision, if this turns into a regulation or directive under the Single European Act, that will mean simply acting as agents for a European system, and the effect will be to bring in majority voting. While it is being negotiated, we will be able only to tinker with it, not to change it, and it will subsequently be adjudicated by the European Court of Justice. That will cover the whole of our banking and financial services, which is an enormous threat to the City of London and an enormous threat to this country. I believe that it is also a threat to the Bank of England. I suggest that we wake up and realise exactly where all this is going.
	I said that I was going to say something on a more positive note. There should be much more emphasis on the importance of giving credit arrangements to companies that need credit in order to buy the excellent machines of companies such as JCB in my constituency and others. We should also remember that small businesses employ 58 per cent. of the UK's private sector work force and contribute half of the UK's GDP, employing more than 12 million people. We want to look after those small businesses.
	One of the first things I did when I came to the House was to bring in the Small Business Bill. I have always believed in it; I have always believed in promoting enterprise and employment. We should bear it in mind that 90 per cent. of UK businesses employ fewer than 20 people, so what should we do to help them? Of course we have to help bigger companies, but at this point in the debate I emphasise that we should ensure that we provide these businesses with post office banks, which I believe would help a great deal. There is a proposal from the Federation of Small Businesses to provide a network of small post office banks, which would help rural communities where there is a great deal of deprivation, while also providing facilities in competition with, but not overtaking, the main banking system.
	I think we should reintroduce enterprise allowances and enterprise zones, which were enormously successful in the 1980s, and I think that we should reduce the burden of legislation and the burden of taxation wherever it is possible to do so in application to small businesses. In the light of what I have already said about the economic crisis, I fear that public expenditure will be massively reduced and taxation will go up. In the course of that, we must also look after small businesses. I strongly advocate more relief for empty properties.
	We want a positive message to go out about what we could describe as the grassroots people in this country; we should ensure that they have a real purchase on their own future. Right now, what is happening is that they are being crushed, yet they represent a very substantial proportion of the business community and of the population of this country. I say we should put small businesses right at the top of the list.

Tobias Ellwood: Perhaps I should have declared an interest. Ironically, British tourism is doing well because people can no longer afford to go abroad and they are looking for domestic destinations. That is why I ask Ministers to consider what we can do to enhance that situation.
	The industry is the fifth largest in the UK, and I do not think that the House fully appreciates that. It is worth £114 billion a year to the economy, so it is twice the size of the IT services sector and four times the size of the agricultural sector. It has 2.6 million jobs and is responsible for one in four new jobs. It is also helping to compensate for the decline in other sectors. With 13 million visitors to the UK every year, it is a sector worth investing in.
	We can all be proud of the heritage that we offer, including museums, theatres, countryside, villages, towns and sporting events. There are myriad tourism opportunities in the UK that are unique to this country. Oxford cannot be replicated in Dubai. The Tower of London cannot be reproduced elsewhere. What we have here is special, and we need to promote it. I fear that we are not doing so.
	There are some basic failures in our approach to tourism. The first is the lack of leadership. Tourism is not properly represented in the House of Commons. Responsibility for tourism is divided up between various Departments. For example, the Department for Communities and Local Government deals with fire regulations for hotels and bed-and-breakfasts. The Home Office deals with visas. The Department for Culture, Media and Sport deals with a small percentage of connections with VisitBritain, and the Department for Business, Enterprise and Regulatory Reform looks after small businesses. There is no forum to bring those voices together to ensure that legislation created in other Departments does not have a knock-on impact on the tourism industry. That is exactly what happens at the moment.
	Visa costs went up about a month ago, with no consideration and no communication with the DCMS. The cost of our visas now means that we get about one fifth of the number of oriental visitors that France or Germany get. That means that we lose a lot of revenue to the Exchequer.
	Let me illustrate the importance of tourism. Every pound that is spent by VisitBritain abroad brings £36 of investment into the UK. I ask hon. Members to show me another Department that has that return on an investment—where one pays £1 and gets back £36. That would suggest that in these economically difficult times, particularly while exchange rates are what they are, we should be considering putting more money into our British tourism industry and, unfortunately, that is not happening.
	One would think that when we are about to host one of the most important sporting events in a generation, the Olympic games, we would take advantage of that fact and harness the marketing opportunities. However, the Government are not spending a single penny on marketing to take advantage of that once-in-a-lifetime opportunity. Surely that must change.
	Some other basic issues are hindering our tourism industry and preventing it from flourishing in the way that it could be. We have a confusing system of structures—an issue caused by the promotion of the regional development agencies. We have had 10 years in which England has had no strong voice to represent itself or to work with VisitScotland or VisitWales. Things are changing. The Government have woken up and recognise that the RDA system does not work for tourism. I am pleased that we are moving that way, but it has taken a decade for us to realise that.
	We then have the problems to do with local council support for tourism. Councils in places such as Lincoln and the Isle of Wight are closing their tourism departments because that saves money. They invest that money in other departments, knowing that they will get financial rewards from Government, because such activity is financially incentivised. Surely that cannot be way in which local authorities should support our tourism industry.
	The tourism industry is large, as I mentioned. Some 200,000 small and medium-sized businesses are involved in the industry, including everything that one can imagine from the seafront arcades to the British pub. That is another example of where the Government could surely provide more support. We are all aware of the facts; we get all the literature from the organisations. Some 36 pubs close every week simply because of the duties and the taxation regimes that have been imposed on them, which are archaic. VAT has gone down, but duties have gone up. Will the Minister explain whether, when VAT goes back up, the duties imposed on alcohol will go back down? I suspect that the answer will be no.

Roberta Blackman-Woods: It is always interesting to follow the hon. Member for Bournemouth, East (Mr. Ellwood). Although I do not agree with everything he said, he is right to say that we should do more to promote tourism.
	In the few minutes that I have this evening, I want to consider how the economic downturn has affected the north-east. Like my right hon. Friend the Member for Stirling (Mrs. McGuire) and others, I want to drill down and look at how the economic downturn is affecting a specific area and impacting on families.
	I consider the downturn to be especially tragic for the north-east, because we were just starting to experience the obvious signs of regeneration. It is very curious that the Opposition should accuse the Government of not mending the roof while the sun was shining, as many hon. Members will have experienced the impact of regeneration in their constituencies.
	In Durham, we could see it happening on the ground. We have a new hospital, and new GP surgeries are coming on stream just now. A number of schools have been replaced, and there are more new schools in the pipeline. We have managed to cut NHS waiting lists massively, to the point where they are almost non-existent, and we have also improved the educational attainment of our young people.
	When Labour came to power in 1997, barely 30 per cent. of young people in Durham were getting five A to C grades at GCSE. Now, we are slightly above the national average, but that change in my constituency did not happen by accident. It came about because of the investment made by this Government. It is therefore particularly tragic that we should be in an economic downturn, as I said, and my plea this evening is that the Government continue to invest in those areas for growth that have been identified in the north-east's economy, and try to turn things around sooner rather than later.
	Unemployment in the north-east stands at 8.6 per cent. That is somewhat higher than the national average of 6.5 per cent. and it is very bad—but nowhere near as bad as it was in the 1980s and 1990s, when some wards in my constituency had unemployment rates of 40 per cent. That was absolutely dreadful.
	I listened with some interest to the hon. Member for Tatton (Mr. Osborne) to see whether he would recognise what the previous Conservative Government had done, or put forward any policies to turn the situation around now. He did neither: all we got was a really pathetic and petty rant against the Prime Minister that I think was unworthy of the Opposition at this time of economic downturn.
	The difference I note between what the present Government are doing and what the Conservative Government did is that now people are not being left on their own to manage the recession, as the Government's real help packages emphasise. We have real help for pensioners, with the delivery of a one-off £60 payment to 12 million of them and an increase in pension credit by £6 to £130 a week. We have increased tax allowances to put more money into the pockets of families and, critically, the Government have brought forward an increase in child benefit and in child tax credit. We are putting more money into the pockets of hard-pressed families, not cutting child benefit in real terms, which is what happened under the Conservatives.
	We are also giving real help to businesses, which is what we need now. Not only have we cut taxes for households, but we are cutting taxes for businesses and promoting policies to get credit and lending going again. We are deferring tax payments: in the north-east, 2,910 businesses have been helped by tax deferment worth £50 million. We are also, where possible, bringing forward capital projects and putting money into social housing and the building of social housing through the Homes and Communities Agency. I am not suggesting for one minute that we have done everything that we can, and I hope that the Budget will contain more measures to support businesses, but we are helping businesses. We have also put more money into training and skills development.
	Business Enterprise North East—there was nothing like it in existence during the '80s and '90s—has a website that points businesses to a range of existing measures to help them. Specifically in the north-east, the regional development agency has pulled together European money from JEREMIE—joint European resources for micro to medium enterprises—the European regional development fund and the European Investment Bank to create a £125 million new venture capital fund, to help business development. That is aimed at those businesses that want to develop and grow during this period.
	In addition, NatWest and RBS nationally have provided £3 billion of funding for new financial services. That amounts to £250 million for the north-east to support small and medium-sized enterprises. Some of the money is still being rolled out through the economy, but it is important in this debate to recognise that, slow though it has been—painfully slow—some of our banks, particularly where the Government have a say in how they operate, are now lending.
	I have been holding my own summits in Durham—three business summits across a range of sectors. Businesses say that they found the information the Government have given them very helpful, but they want some other, additional things to happen. They want local authorities to be encouraged to direct their procurement to use local companies, where that is possible. They want more venture capital and more funding for companies that want to expand. They want prompt payment by the public sector and action to be taken on business rates. I am pleased that the Government have been listening to some of the points that they have been making. What is certain is that, as we plan to come out of recession, we must not go back to the same system as before. My plea to the Government is that they support development in particular sectors in the north-east.
	On green energy, there are very good companies already in place with a substantial share of the market in solar, geothermal and wind energy. A lot of the technology for carbon capture and storage was developed in the north-east, but has not been applied there. My plea is that the Government help companies that are developing that technology to be able to apply it, so that they can create jobs in future. I also want to make a plea for green cars. I ask the Government to look at Nissan's schemes to produce electric cars, and to support Nissan. I hope that they will also support the health and process sectors. Lastly, I ask the Government not to take their eye off the need to develop higher-level skills and high-value jobs. I hope that they will use our universities and colleges, so that we get more knowledge transfer into our local economies.

Robert Flello: I am afraid I do not have time; I am sorry.
	The impact on pubs has been mentioned. We need to take into account my hon. Friend the Member for Chorley's idea of bringing VAT relief to an end. We need to explore the effect that will have and to make sure that it does not have a negative impact on pubs. The duties must be addressed.
	One thing I would have loved to have time to expand upon is state-run businesses, perhaps in the environmental sector. Now might be an opportunity to look at using the state system to get up and running some environmental businesses that perhaps later we could put back into the private sector.
	As has been mentioned by my hon. Friend the Member for City of Durham, we did put the roof on. I could list the countless things that we have done in Stoke-on-Trent, South, from children's centres, Sure Start centres and health centres; huge improvements have been made in and around the constituency. I would list them if I had time.
	Finally, the Opposition Front-Bench Members lamented the fact that they have been trying to get this debate for a long time. If that were the case, I would have hoped that the shadow Chancellor, who I see in his place—although the shadow shadow Chancellor is not—would do a much better job in his speech. Quite frankly, if that was the standard with six months' notice, it was pitiful.

Stephen Timms: I apologise to you, Mr. Speaker, and to the House, as I was detained outside the House at the start of the debate for the reasons that the hon. Member for Runnymede and Weybridge (Mr. Hammond) acknowledged.
	We have had a wide-ranging and interesting debate. It is clear that Members disagree across the Chamber. The Government's approach is to support the economy through the difficulties and to tackle the downturn on an international track and on a domestic track. As we have heard, the international track will culminate in the meeting of G20 leaders later this week. The leaders of the world's biggest economies will meet in the London borough of Newham—which they may not have visited before, but to which they will return for the Olympic games in 2012. At the heart of the recession in this country are worldwide problems that need to be addressed through worldwide co-operation. The Prime Minister and the Chancellor have therefore been leading worldwide discussions on how best to co-ordinate action to tackle the global credit crunch. The G20 Finance Ministers and central bank governors made progress in Horsham on 14 March; we want the leaders to go further still on Thursday.
	Alongside the international track, we have been taking decisive action on the domestic track, bringing real help now to families and to businesses. Our response has had four steps: step 1, last October, was to save the banking system from collapse; step 2 was to deliver a stimulus to the economy, which we did before Christmas in the pre-Budget report; step 3 was to take action in January to support bank lending, with further details and agreements set out earlier this month; and step 4, in the Budget ahead, will be to prepare to make the most of the upturn when it comes.

John Reid: At the risk of being tedious, I hope that my right hon. Friend will add to the objectives strengthening transparency. How can we regulate that which we cannot discern? How can we supervise—literally, oversee—that which we cannot see? Unless we strengthen sections 14 and 15 of the communiqué, all the regulatory forums and structures in the world will not be able to operate because they will not have the necessary information from a neutral source. Will he give me a guarantee that the G20 will push on that front?

Schools (Essex)

Eric Joyce: When it comes to mobilising enormous resources and making huge interventions that have the power to change the world, nothing compares with the power of government. This week's G20, led by our Prime Minister, will seek to do exactly that, following on from the Gleneagles summit and other major initiatives.
	Of course, Governments lead by consent and, in general, they must reflect the priorities of the people. Although the people of the UK can be astonishingly generous, it is also a harsh reality that international aid and development rarely sits atop people's list of priorities, especially in these difficult times. Moreover, there is great competition for people's attention with regard to international development, and there is sometimes a risk that if Governments attempt to highlight too many problem spots in the world, people can suffer a sort of fatigue on the subject.
	That is why the ability of some people and organisations, such as the Make Poverty History campaign, to influence and mobilise public opinion is crucial to giving Governments more power to their elbow to help the least well-off in the world. It is also possible for highly motivated people, sometimes with bags of media savvy, to make a targeted intervention aimed at changing the lives of many for the better.
	In the case of the Democratic Republic of the Congo, I would like to mention an initiative that has the power to alter the lives of millions of women in one of the hardest places—perhaps it is the hardest place—in the world to live as a woman: the eastern DRC. In my view—I am not the most qualified to say this, but I have been out a few times—the best prism through which to view life in the eastern Congo is that of the experience of women who potentially face unspeakable sexual violence every day.
	When somebody goes out to the Congo, as I and members of the all-party group on the great lakes region have, they are struck by the many great efforts of the non-governmental organisations in the region and by how enormously challenging a task they face. The Congo has a population roughly the same size as the UK's, and it is roughly the size of western Europe. It is covered in tropical rainforest and it is a difficult country from a communications perspective.
	The Government in Kinshasa were democratically elected through a great triumph of organisation, both by the Congolese and the international community, which made a great effort and contributed lots of cash. However, when visiting, one is struck by the fact that the Congo has a sophisticated body politic in Kinshasa, but an area of utter lawlessness in the eastern Congo. Many hon. Members from all parts of the House are familiar with the things that have taken place there, even in recent years—not just in the past 10 years, but in the past year or so, most recently with the CNDP getting the Congo on television by having, in effect, a kind of civil war. That is now being sorted in diplomatic terms, although Bosco Ntaganda, the man who now runs the CNDP, has been indicted by the International Criminal Court as an alleged war criminal. That will have to be dealt with in due course.
	That is the politics of the matter. The reality on the ground is absolutely stunning, albeit in a very bad way. The first time I went to the Congo some years ago with a former Member of the House and good friend, Oona King, we were taken to a health centre where we were told that we would visit a ward. I was expecting a new build, Tesco-type thing, funded by a number of NGOs. What we came across was a kind of hut. The clinic comprised one room with a fridge, which had nothing in it because there was no power, and another room, which was an operating theatre and had some basic utensils—shiny instruments, sharp implements and things for holding hot water—that had been donated by NGOs.
	There was a ward, and in the ward was a woman, apparently waiting to give birth to a child. The child, we were told, would be a breech birth—it was in the wrong place. A number of other hon. Members were with me at the time, but there it is: a mother was sitting there. It was one of those branding experiences that has not left me. We asked how long the birth would be and the nurse—a man who had had some rudimentary training—said, "It be may be tomorrow morning. She might last until the next morning." We said, "What do you mean 'She might last'?" and he said, "Well, she's going to die. There's nothing I can do about a breech birth. I've got the skills taught in some basic courses, but I don't know what to do about a breech birth. The nearest doctor is 2 miles away." Two miles in the Congo, through tropical rainforests and with all the logistics problems, which as my hon. Friend will know—possibly he is my right hon. Friend—

Eric Joyce: Well, in due course. My hon. Friend will know that 2 miles in the Congo can be a long, long way.
	In a way, we did that classic thing that politicians do. Arriving on the scene in lovely long-wheelbase Land Rovers, we had the potential to change the situation, but we had to make a judgment. In due course we made the judgment that other people in our circumstances would have made, which was that we should move the woman, but that would have disturbed many aspects of how local people were being treated with those limited resources. The point was that that woman expecting a breech birth could have been quite readily dealt with here in the UK, but she was simply going to die, because there was nothing that could be done for her there. As it was, she did not die, but many other women in her situation would have done.
	What I want to talk about this evening, if I can, in the minutes left—a fairly generous number are left, actually, so I will wax slightly rhapsodic—is violence. I go about my constituency occasionally with the cops on a Friday or Saturday night. We see a bit of violence in the streets and recognise where it comes from, what is happening and who the bad guys are—who has been caught up in things because they have drunk too much and so on. All the incidents involve men, and the violence is mainly between them. I am also aware, as are all Members of this House, that behind the scenes in people's homes, violence is being inflicted against women. There is a fabulous women's aid organisation in Scotland, as indeed there is fabulous women's aid provision across the UK. Such violence is a more hidden thing. In a privileged position and with a certain lifestyle, as it were, I do not see anything of it, but many people do. It is a hidden thing, but it exists.
	It occurs to me—psychoanalytically, I might be miles off on this—that when I go and talk to young men in the Congo who have been involved in astonishing acts of violence against women there, they show traits similar to those of the young men involved in the much lower-level stuff going on in my own constituency. In such an area, however, there is a kind of civilising influence and a series of constraints in the law—there is a legal system and the cops are going about. All sorts of things are civilising influences, such as families, including extended families and so forth. Such an influence is brought to bear on many people—it does not apply to everyone—who get involved in violence, particularly violence against women early in their lives. They can change their ways, but some people do not and such behaviour continues throughout their lives.
	When we look at the Congo, what we kind of see, in a bad way, is a Platonic ideal of violence against women. It is completely unmitigated by any mediating institution or mediating experience, and it can be the most brutal thing imaginable on the planet. When we look at the Congo in context, as DFID has to do, it is with the realisation that all sorts of countries in the world need our help and could do with our assistance—the collective assistance of the international community. The best way to look at the situation, however, is through this very easily understandable link between the kind of violence exerted against women in our constituencies at a certain level, and the astonishing dehumanising violence exerted against women in the Congo.
	I have just read the complete works—they are not a big bunch; there are about 10 books—of Cormac McCarthy, a great writer. It is boysy stuff; there is a bit of violence and a bit of lovely stuff. He is a fantastic writer, as I have said. There is a scene in "Blood Meridian", which is an especially boysy book—a bit cowboy-ish, if I can put it that way. This scene occurred to me as I was preparing for tonight's debate. A young boy called "the kid" is being recruited into a kind of militia. It does not have any legal status or legal authority. It is a militia formed of a brutal bunch of guys who go about in 1849 taking what they want and what they can. They have got enough power and enough resource; in a way, they are beggars in the land, but they are quite heavily armed.
	At one point, the kid is asked by the recruiting sergeant of the militia if he would like to join it. The kid says, "What do they give you?", and the recruiting sergeant says, "Every man gets a horse and his ammunition. I reckon we might find ye some clothes in a case." The kid says, "I ain't got no rifle" and the recruiting sergeant says, "We'll find ye one". The kid says, "What about wages?" and the recruiting sergeant says, "Hellfire, son. You won't need no wages. You get to keep everything you can raise." Essentially, he is saying, "If you've got a horse, some kit and a weapon, you'll be fine; you can take whatever you want from anyone."
	That is an almost exact parallel with the situation for young men in parts of the eastern Congo today. Viewed as a human experience for young men—this is certainly not to sanitise the kinds of things that some of them get up to—that is a useful way, to say the least, to understand the way things are for them and for the victims, with the lack of any kind of justice or legal system in the eastern Congo. Before moving on to issues such as health or education, we should start by trying to establish a coherent justice system. Lord Mance, who is a member of the all-party group and an Appeal Court judge, has compiled a fantastic report of which the Government have taken note. I hope it will play a part in helping to create an effective justice system in the Congo in the coming years.
	It also behoves us to look carefully at what articulate and able individuals in the UK can do to give the Government more power in saying, "Look, we want to spend extra cash on these difficult places." As I said at the beginning of my wee speech, the reality nowadays is that if we say we want to spend an extra £100 million on the Congo, people will often say, "Hang on, but all these people in our country have just lost their jobs and charity begins at home." People are decent, but they very often look after their own first, and we can all understand that.
	There is an initiative at present that extends from an initiative my hon. Friend the Minister will have heard about. It is called V-Day and it essentially comes out of Eve Ensler's "The Vagina Monologues", which is played all over the world to great effect, including in the Congo. V-Day is focusing on the Congo for the next five years, which is a significant period for such an important campaign that operates all over the world. V-Day is headed in the US by Jane Fonda, and in the UK Lynn Franks and Gail Rebuck are leading lights, and Tamsin Larby organises many of its activities. They currently have a campaign that is designed to enhance the facilities of Panzi hospital in Bukavu. The hopsital is led by Dr. Denis Mukwege, as my hon. Friend the Minister knows. Many of us have met Dr. Mukwege, an inspiring character who travelled around the US recently raising cash for the "City of joy" project. The campaign is essentially aimed at both the treatment of the women who find their way to the hospital and other places like it, and also their rehabilitation. It is entirely focused on the gender issue because that offers the best political perspective, and it is where the greatest need is.
	Once a justice system and the rule of law is established, or progress is made towards that, the next thing to deal with is health. In terms of women who are the victims of violence in the Congo, all these strands come together, because until we start to deal with the way in which men instinctually behave towards women—because they can and they are not subject to the educational learning influences that we in the west are—we will essentially get nowhere.
	In asking my hon. Friend to say what he can about these matters, I want to conclude with three quick points. There is a great demand for all public resources throughout the world at present. A lot of stuff is going on, and a lot is taking place in the Congo involving many different NGOs. There seems to be scope to harmonise some of the efforts, as there is some duplication of effort by Governments, NGOs and so forth, and NGOs are open to that argument. It is also worth mentioning Lord Mance's important report on justice and the rule of law in the Congo. It is very well written, and it is a profoundly important document. Most important of all is the campaign by V-Day UK to help the "City of joy" project. It is going to raise $1 million or £1 million—I am not sure which. It will be helped by UNICEF. I have visited the site and I know that the Department for International Development has contributed to it. Can my hon. Friend say that it will keep a close watch on the project in the coming months? There are many other things going on in the world and in the Congo, but it is a profoundly important project where we will actually see results. DFID is a great force for good in the Congo, and I believe that V-Day UK is also a great source of inspiration and a great force for good in the Congo.